BIZCHINA> Center
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BIZCHINA> Center
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Auto market future mixed
By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2008-05-07 11:05 Cheng Xiaodong from the supervision center analyzed as competition in the market is heating up and expanding production capacities, auto prices will go down gradually. The NDRC predicted most automakers will pull down products costs through integration and asset restructuring. According to Cheng, the second quarter is the off-season for the auto market and consumers are more willing to wait and see. But the Beijing Auto Show in April brought many new auto models to Chinese consumers who will see diversified choices, intensifying the competition. Meanwhile, the appreciation of the yuan, strong interest rate hike expectations, and fuel tax system reform will impact vehicle consumption plans, pulling down auto prices indirectly. A car industry research report jointly released by Chinese authorities such as the NDRC and the Ministry of Commerce also echoed the opinion that the car market would be dominated by price reductions despite rising production costs. But automakers have hiked their prices to offset rising labor and raw material prices. Chery Auto raised its price by three percent before the Beijing Auto Show, and Jianghuai Auto subsequently also added 5,000 yuan to all its vehicle models. Automakers without price hike plans count on using other means to survive in the market. "In addition to directly raising prices, making higher priced new models is another option," said Xu Liuping, chairman of Changan Automotive Group. Xu added that prices of some newly-released auto models are about 1,000 to 2,000 yuan higher than expectations, a means to offset rising costs. "The price of small- and medium-displacement vehicles has reached their bottom line and will be kept stable this year," said Wang Wei, vice general manager of Changan Suzuki Automobile Co Ltd, adding some of small vehicles might see price hikes this year. It's not strange at all the average costs on each vehicle will increase by 1,500 yuan to 3,000 yuan, said Rao Da, secretary-general of the Union of National Passenger Car Market Information. Jia Xinguang, an independent auto analyst, said if inflation continues, automaker won't be able to keep holding their tongues on the price issue. The economical vehicle niche will be the first affected. (For more biz stories, please visit Industries)
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