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Shanghai VW to Slash Car Prices
Shanghai Automotive Industry Group will cut the price of the Shanghai VW Santana 2000 sedan in the second half of the year to revive flagging sales, the Shanghai Daily reported Tuesday.
SAIC President Hu Maoyuan said the move is designed to better position the Santana in advance of the wave of competition expected from China's entry to the World Trade Organization (WTO), the paper reported.
SAIC operates joint ventures with both Volkswagen and General Motors.
Hu did not reveal the size of the upcoming price cut, the paper said. The Santana now retails for about 180,000 yuan (US$21,687).
Shanghai VW recently started reconstruction on one of its plants to install more advanced production facilities for the introduction of an economy car in 2002, the paper reported.
VW's Santana, which was one of the first foreign-made sedans on sale in China, has lost ground as more car models became available on the domestic market.
In the first half of the year, nationwide Santana 2000 sales plunged 18 percent, while total sales of all Shanghai VW cars including the Santana and the Passat slid by 12.5 percent on-year to 97,171, the report added.
Competition will become more aggressive still when tarriff cuts on imported sedans are slashed to 25 percent compared with the current 80-100 percent, within five years of China joining the WTO.
Many Chinese consumers have held back on buying a car and are awaiting lower prices after China's WTO membership, industry sources said.
In April, Shanghai GM reduced the price of its Buicks by as much as seven percent, and Chang An Suzuki recently cut the cost of its Suzuki-Auto model by 4.8 percent, the report said.
Other domestic auto makers held prices steady but gave gifts to car buyers, including mobile phones and computers, the paper added.
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