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Guangzhou Toyota ignites coming price war in auto market

By Pei Pei (chinadaily.com.cn)
Updated: 2008-09-27 16:06

Guangzhou Toyota Motor Co Ltd launched the 2009 Carmy G, a heavyweight model in the country's mid- and high-grade market.

Insiders speculated this move could ignite a new round of price wars in China's auto markert.

The new model has four variations priced between 208,800 yuan ($30,526) for the 200G and 242,800 yuan for the 240G Navi Luxury.

"The Carmy 240G has a discount of 11,500 yuan, including three newly-added safety features that are worth 6,500 yuan in total plus a 5,000 yuan price reduction," said Feng Xingya, director and vice executive general manager of the Guangzhou-based automaker.

The three safety features include a vehicle stability control (VSC) system, a traction control (TRC) system and a car reversing radar system, according to Feng.

The combination of new model's launch and price reduction at one time may trigger a new round of price wars in China's domestic market, which suffered year-on-year sales decline for the first time in August in recent years.

But due to accumulating pressure from soaring raw materials and sluggish auto consumption, automakers in China are now facing the dilemma of having to boost sales by slashing prices.

So, Guangzhou Toyota's move is regarded as a strategic one to boost sales of mid- and high-grade models.

Camry, a typical model in China's mid- and high-grade auto market, recorded a total of 72,173 in sales from January to August this year, becoming the best seller in the segment, well ahead of its counterparts from other brands.

However, China's automakers have been encountering unprecedented pressures on achieving their 2008 sales targets since the second quarter. There is no exception for Guangdong Toyota, facing the tough task of achieving its sales goal of 210,000 vehicles in 2008.

"It is hard to achieve this year's sales goal, but we will try our best." said Hu Su, vice general manager.

In addition, Guangdong Toyota will extend a second production line in the middle of 2009, where initial annual capacity will be 120,000 units. It is another tough task for Guangdong Toyota to relieve the problem of over-capacity of production against the background of low auto consumption.

"As Chinese people have a strong desire for cars, it is sure the market will develop sooner or later. There will be a new mode produced on the second production line, together with the Camry." Feng said.