China to Further Liberalize Auto Sector

China is considering to further liberalize the auto sector to prepare for the imminent entry into the World Trade Organization (WTO), according to a front-page story on "China Materials News".

Related departments disclosed that China will further abolish restrictions on the sector to allow auto makers to manufacture all varieties of automobiles and auto products and liberalize prices on the car market.

Auto producers are encouraged to merge to promote scale production in order to lower costs and enhance efficiency.

Moreover, China is also considering to stop levying irrational taxes, such as consumption tax imposed on auto factories and license tax imposed on car-purchasers.

In recent months, a price war has been raging across the country as a number of auto makers slashed their prices to promote sales.

The Dongfeng-Citroen Automobile Co Ltd based in Wuhan, capital of central China's Hubei Province, announced that it will cut the price of its Fukang cars by 6,000 yuan (US$722.9) to 15,200 (US$1,831.3).

The unexpected announcement came just days after the company said that it does not plan to follow Shanghai Volkswagen, which cut the price of its Santana 2000 by more than 10,000 yuan (US$1,200).

Jetta, a Changchun-produced Volkswagen model and Xiali, produced in Tianjin, will be very likely to follow suit in the near future.

Industry observers commented that even though China will loosen control on the sector and auto makers will try every means to sell their products, consumers are still very cautious on buying cars.

Price cuts have not stirred up a wave of purchasing as many had expected. Insiders said that price cuts will continue in the short term.


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