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First price war expected for April

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-02-09 09:39

Special coverage: Auto China 2006
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Sun Muzi, vice director of the automobile market research center of Sinotrust Group (Shanghai), said that there is a lot of uncertainty over the rapidly changing and developing Chinese auto market, but automobile market prices will continue to decline in 2007.

"Compared with 2005 and 2006, the price decline will slow down this year," said Sun. "The overall price decrease is expected to be three to five percent. Along with the rational and stable development of China's auto industry, the sharp price decrease that occurred a few years ago is unlikely to happen again."

Sun said that the price adjustment on the automobile market will mainly focus on the price gap between different grades of vehicles. At present, China's mainstream economy car prices are about 100,000 yuan (US$12,908), middle-class models are around 200,000 yuan and the prices of luxury cars are mainly between 300,000 and 500,000. "The price gap between different grades of vehicles is quite large. Higher-class vehicle models are almost double the price of a lower class model. This situation is unreasonable. On mature foreign markets, there are also price gaps between different levels of vehicles. However, the prices are relatively consistent. For example, on the US market, an A-class car is priced at US$10,000 to US$13,000 and B-class car prices are US$15,000 to US$16,000. Along with the development of China's automotive market, these unreasonable price gradients are expected to be reduced."

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The full text is available in the February Issue ofAutoChina.