A new state regulation may take some of the luster off the luxury car business as image-conscious customers will soon be displaying Chinese characters if their vehicles are made inside the country.

 

The government has ordered the nation's automakers to stamp their name in Chinese characters on the tail of every domestically made model, including those that carry BMW and Mercedes Benz logos.

 

The new rule, posted last week on the National Development and Reform Commission (NDRC) website, applies to all cars sold after May 1.

 

The regulation was designed to protect consumer rights and enhance brand awareness, said the top planning and monitoring body.

 

"Obviously, the Chinese government hopes to highlight the brand image of Chinese companies as they cooperate with foreign auto giants," said Wang Zhihui, an auto analyst at Shenyin Wanguo Securities Co.

 

"Domestically made premium cars such as BMWs, Mercedes Benz and Audis will be affected most as the new sign is likely to damage their high-end brand image and raise concern over quality," he said.

 

"The new regulation will change their marketing strategy as they continue their localization in a move to lower car prices to attract more Chinese customers, and it could boost the sales of other imported cars such as Lexus and Volvo."

 

BMW Motors Corp now produces three models of its new 3 series and 5 series in China under cooperation with Brilliance Automobile Corp, turning out more than 15,000 units a year. Daimler-Chrysler AG rolled out two Mercedes Benz E-class models assembled in Beijing at the end of last year, while Audi last year sold more than 55,700 units.

 

These Chinese-made cars mainly target the domestic market as their prices are about 30 percent lower than those of imported ones.

 

(Shanghai Daily February 15, 2006)