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News Analysis: Why Price Cuts Bring No More Car Buyers in China?
Those who want a car are still waiting although price wars have already reduced car prices in the Chinese market.
Domestic cars experienced the largest-ever fall in price recently, with the prices for the Santana, Jetta and Fukang dropped 5,000 yuan (602.4 US dollars) to 13,000 yuan (1,566.3 dollars) and the price war is still going on.
However, consumers remain calm, except for a slight increase in the sales of Fukang cars, the transaction volume of other cars did not increase in the Yayuncun car market, Beijing's largest, and the same situation was reported in many other cities.
Jia Xinguang, an expert with the Automobile Development Research Institute of the State Administration of Machinery Industry, blamed the price war on the fact that small-scale car enterprises expect to capture the market, and some companies are eager to sell out older car models in the process of producing new cars.
He believed that the price of Chinese cars will not decrease too much, citing that the Chinese car enterprises cannot lower the costs through mass production. Now, no enterprise in China actually manufactures more than 20,000 cars annually.
Most Chinese still cannot afford a car, but many expect to buy a car after the country's entry into the World Trade Organization (WTO). China will cut its tariffs on automobile imports from the current 80 to 100 percent level to 25 percent by the middle of 2006.
International auto exhibitions have provided opportunities for Chinese consumers to check out attractive car models. Some consumers are waiting for new and beautiful cars to hit the market so they can purchase them.
The environment for using cars should be upgraded in China, said Zhang Xingye, director of the China Automobile Engineering Association.
The enthusiasm of car buyers will be affected if there is no help available when a car breaks down or it takes a whole week to make a minor repair on a car, or extra charges are collected on highways, Zhang said.
Feng Fei from the Industrial Economy Research Department of the State Development Research Center urged the central government to loosen the restrictions on car models, prices and oil in a move to stimulate domestic demand and open a wider market for car enterprises.
He said that the effort is also in response to the challenges for the automobile industry brought by the country's pending accession to the WTO.
China produces about 1.6 million automobiles annually. In the past 20 years, the country put restrictions on car consumption. However, more and more Chinese will buy cars as the economy grows faster.
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