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Time Ripe to Relax Domestic Car Pricing
The State Development Planning Commission has lately relaxed price controls on domestic cars, saying the current market conditions have been mature enough.
Prices for domestic cars were in the past set or swung at a benchmark level by the government, because production was monopolized by a few manufacturers as FAW-Audi, Red Flag and Santana in Shanghai and mainstream buyers were limited to government institutions. Now the situation has changed. Many new makes entered market competition as Xiali, Chang'Alto, Citroen, Buick, Accord and others. Besides steady growth of government purchase, individual buying prospered and the market is now ready for relaxed prices.
The action will help domestic enterprises to face challenges brought by WTO entry and take hold of market shares. The fierce competition will drive them to lower prices and meet international challenges.
Relaxed prices will also help to bring a shake-up to auto industry as a whole. China now has 13 car manufacturers (the US has only 2), but the production in 1999 was only equal to a medium-sized enterprise of world level. Now Chinese carmakers can adopt flexible prices in market competition.
By PD Online staff member Li Heng
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