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New Round of Car Price War Breaks out in China
The Dongfeng-Citroen Automobile Co. Ltd, China's second largest compact car maker, announced Tuesday to slash its Fukang car prices across-the-board by 6,000 to 15,000 yuan (US$1,800), in a move widely believed to fuel the price-cutting war among China's big auto makers.
One week ago, the Shanghai Volkswagen Automobile Co. Ltd triggered the war by cutting its popular Santana 2000 sedans by more than 10,000 yuan (US$1,200) nationwide.
A representative of Dongfeng-Citroen's Beijing Sales Office confirmed to a chinadaily.com.cn reporter Tuesday morning, that it had received notification from the car's Wuhan headquarters to start sell cars at reduced prices beginning Tuesday.
Earlier, the Chengdu Morning Post reported that all Sichuan sales agents of Citroen Fukang cars received Wuhan orders to reduce prices.
The popular Fukang 1.4-litre metallic-lacquered car now sells at 122,000 yuan (US$14,700), dropping 7,000 yuan (US$848). Another Fukang car selling well on the market, the Fukang 1.6-litre metallic-lacquered car gets a new tag at 136,000 yuan(US$16,400), down 6,000 yuan (US$725). Its newly-developed automatic-gear Fukang-998 now sells at 152,000 yuan (US$18,400), down a whopping 15,000 yuan (US$1,820).
Analysts said the wide-range price reduction measures by Dongfeng-Citreon will inevitably lead to a full-swing price war among China's emerging car makers, especially the Changchun-based FAW (First Automotive Works) Volkswagen Automobile Co. Ltd, which manufactures the popular Jetta and Red Flag models, and the Shanghai Volkswagon Automobile Co. Ltd, which produces Santana cars.
It is widely believed the Shanghai GM Automobile Co. Ltd. and the Guangzhou Honda Automobile Co. Ltd would also join the price-slashing war later, in order to lure a growing well-off Chinese buyers.
China's approaching accession into the World Trade Organization has made price cut for domestic car makers imperative. Competition will become more aggressive when tariff on imported sedans are cut to 25 percent as compared with the current 80-100 percent, within five years of China joining the world club.
Many Chinese consumers have held back on buying a car and are waiting on the fences for lower prices following China's accession to the WTO, which is widely believed to take place by the end of this year.
In April, Shanghai GM reduced the price of its Buick model by as much as 7 percent, and Changan Suzuki recently cut the cost of its Suzuki Auto model by 4.8 percent. Other domestic auto makers held prices steady but gave gifts to car buyers, including mobile phones and computers.
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