Imported car prices are expected to remain high due to a rise in the value of the yuan and a short supply.

Those two factors combined to offset a tariff reduction.

Volkswagen AG, European's largest carmaker, lowered prices of its Touareg V6 sports utility vehicle. The biggest reduction was 170,000 yuan (US$21,250) and some models now have a sticker price of 690,000 yuan, according to the company's statement over the weekend.

It also cut the price of its 4.2-liter Phaeton V8 luxury sedan from 1.13 million yuan to 1.08 million yuan. A Phaeton V6 is now available for as low as 828,000 yuan while a Phaeton W12 can be purchased for 1.65 million yuan, the company said.

Germany-based Volkswagen is the first auto manufacturer to adjust its pricing strategy after China further reduced taxes on imported cars from 28 percent to 25 percent on Saturday - part of the nation's commitment to the World Trade Organization.

An analyst said the price cut would likely boost Volkswagen's sales.

The imported car market cooled a little after China capped an up to 20 percent excise tax on SUVs and luxury sedans since April 1. However, other carmakers including Mercedes-Benz, BMW, Bentley and Renault said they would not lower prices.

"The appreciation of the yuan, which already offset the slight decline in duties, increased our costs," said Huang Lixin, general manager of Bentley's agent of east China. "Customers of high-end models are not so price-sensitive and the short supply will keep prices high," saids Huang. He predicted prices will rise in the second half of this year.

More than 50 Bentley's were sold between January and the end of June in eastern China compared with 35 last year. Some customers will have to wait until next year to get their car. Foreign automakers also stepped up other measures to boost sales instead of reducing prices.

Mercedes-Benz recently equipped all its S series with a DVD Chinese-language voice navigation system after adding a night view assist on its S350 to boost competitiveness.

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