Italy's Fiat Auto is the latest group to join the compact car price war that has been raging in China over the past few months.

Yesterday, the company slashed the prices of its Siena and Palio -- which are both made by its joint venture (JV) in Nanjing in East China's Jiangsu Province -- by 3,000-10,000 yuan (US$360-1,200).

The 1.5-litre Siena now retails between 95,900 yuan (US$11,600) and 128,900 yuan (US$15,600), while the 1.3 and 1.5-litre Palio costs between 78,900 yuan (US$9,500) and 119,900 yuan (US$14,500).

"The price decreases, as a result of our cost-cutting efforts, will help us maintain competitiveness in China's compact car market,'' Nanjing Fiat said yesterday in a statement.

The compact car market is one of the fastest-growing and most crowded in China.

Many Chinese-based compact car producers have been cutting their prices over the past three months as they fight for a greater market share.

It means the prices of the Xiali 2000 and Vizi from Tianjin First Automotive Works Xiali, the Polo and Gol from Shanghai Volkswagen, the Sail from Shanghai General Motors (GM) and the Fiesta from Chang'an Ford, in addition to others, have come tumbling down.

A slew of new compact cars will be produced in China this year, further heightening competition within the market.

Japan's Honda will launch the Fit next month from its JV plant in Guangzhou, capital of South China's Guangdong Province.

Nanjing Fiat, which was set up at the end of 2001, said it has sold more than 50,000 Palios and Sienas since the beginning of last year.

Fiat Auto, which is 20 per cent owned by US giant GM, wants to produce from 150,000 to 200,000 cars annually by 2006 in China.

The company said it will introduce more passenger models into the JV in the future, such as the Alfa Romeo and Stilo.

Sales of passenger cars made in China are forecast to exceed 1.6 million units this year, up from 1.02 million units in 2002.

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