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Car Prices Down

Aware that China's WTO entry would trigger big growth in car imports, the country's leading automakers have initiated price cuts to retain sales since the beginning of the new year.

The car sales company for Jilin-based China First Automobile Group Corporation, one of China's three leading automobile manufacturers, recently announced that it has lowered prices for four of its Hongqi (Red Flag) models by an average of 30,000 yuan (US$3,614) per vehicle.

The four middle and top-of-the-range models, now cost between 219,000 yuan (US$26,385.5) and 319,800 yuan (US$38,530.1) each. "The new prices are lower than for imported cars of the same class," said Sun Baolin, marketing manager for the sales company.

Earlier, prices for Mazda manufactured in South China's Hainan Province were also lowered. The cuts ranged from 10,000 yuan (US$1, 205) to 20,000 yuan (US$2,410) per vehicle.

Dongfeng Citroen Automobile Co., Ltd., a Sino-French joint venture based in Hubei Province, has lowered the prices of its Fukang cars.

Shanghai Volkswagen Automobile Co., Ltd. and Shanghai GM Company Ltd., which together account for half China's car market, said that they would not consider price cuts in the near future. But analysts here suspect the length of the delay will be determined by strength of the impact from imported cars.

China's WTO commitment requires it to drastically lower car import tariffs over the next five years. On January 1 this year, the tariff for cars below 3L was lowered from 70 percent to 43.8 percent and for cars above 3L from 80 percent to 50.7 percent.

Customs statistics show 105 cars were imported through the Shanghai Customs in the first week of January 2002, a much higher number than over the same period last year.

Most of the newly imported cars, customs sources said, were well known brand names including BMW and Daewoo. Prices of many BMW cars are now 80,000 yuan (US$9,639) to 210,000 yuan (US$25,301) lower than December last year.

Chinese automakers reported the production of 643,373 cars in the first 11 months of 2001, up 17.14 percent year-on-year. Car sales reached 656,779 in the same period, up 22.9 percent.

(China Daily January 13, 2002)

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