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Shanghai GM, a General Motors Corp-Shanghai Automotive Industry Corp joint venture, began offering discounts yesterday of 7,000 yuan (US$904) to 10,000 yuan on the complete line of its most popular mid-range models.

The Excelle sedan, HRV hatchback and wagon, which went on market in 2003, were priced between 117,800 yuan and 156,800 yuan before the discounts.

"The price reduction aims to sharpen our competitive edge with the hope of maintaining market leadership," said the company, which topped China's car sales last year.

Shanghai GM boosted Excelle sales 17 percent to 176,000 units in 2006, second only to Volkswagen's Jetta in the mid-class category, according to the China Association of Automobile Manufacturers.

The model was a major driving force behind Shanghai GM's total sales of 365,400 units during the period, an increase of 23 percent.

"Shanghai GM may have taken the action to reduce Excelle inventory before launching upgraded units this year," said Wang Zhihu, an analyst at Shenyin Wanguo Securities Co Ltd.

"Considering the important position Excelle holds, the price reduction could lead to a massive price war, especially as the non-prime season began in March and has caused auto buyers to hold onto their wallets."

The car maker will launch a revamped Buick Epica next week, which earlier had some overlap in price and market position with the Excelle.

The price reduction is the third by Shanghai GM in the past two months.

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