Volkswagen China pledges price cuts
( 2002-06-06 10:09 ) (1 )

German car giant Volkswagen said on Wednesday it plans to set the prices of its Chinese-made vehicles at the same level as those on the world market within a year.

However, the company does not intend to enter the fierce price wars on the Chinese automobile market that followed the nation's entry into the World Trade Organization.

Bernd Leissner, president of Volkswagen's Asia-Pacific operation, announced the plan on Wednesday on the eve of the seventh Beijing International Auto Show, scheduled to run from June 6 to 13.

Leissner said that Volkwagen's vehicles were so expensive in China mainly because some components from local suppliers cost 10 to 80 per cent more than in other parts of the world.

"We have not followed the price war in the Chinese market and we will not do this," Leissner told a press conference.

Many carmakers in China have slashed prices to counter a flood of car imports that was spurred by an easing of import tariffs in line with China's WTO commitments.

China cut its tariffs on auto imports from between 70 and 80 per cent to between 43.8 and 50.7 per cent at the beginning of this year. The tariffs will reduced to 25 per cent by mid-2006.

"Our plan is to give the customer more value instead of decreasing prices," Leissner said.

Currently, Volkswagen has two passenger-car manufacturing joint ventures in China, which control more than 50 per cent of the Chinese mainland car market.

Shanghai Volkswagen -- a joint venture with the Shanghai Automotive Industry Corporation -- produces Santana, Passat and Polo cars.

FAW Volkswagen -- a joint venture with First Automotive Works -- makes Jetta, Audi A6 and Bora sedans.

Leissner said cost-cutting would be critical for Volkswagen to fend off other manufacturers and protect its market share in China.