Volkswagen slashes car prices in China
By Gong Zhengzheng (China Daily)
Updated: 2004-06-18 09:38

German carmaker Volkswagen yesterday cut prices on almost all of its cars produced in China for the first time amid a slowdown in local car sales and mounting competition from rivals.

Prices of the Santana, Santana 3000, Passat, Polo and Gol made at the company's joint venture in Shanghai, were reduced by between by 3,000 and 10,000 yuan (US$362-1,210).

Volkswagen's other joint venture in Northeast China's Jilin Province slashed prices of the Jetta, Bora and Golf by 5,000 to 12,000 yuan (US$604-1,449).

But prices of the Audi A6 and A4 luxury sedans produced at the joint venture in Jilin remain unchanged.

"The move is part of our brand strategy moving towards the Beijing 2008 Olympic Games, and it will benefit customers and enhance our overall competitiveness in China," Volkswagen and the two joint ventures said.

Volkswagen Group China was named as the official and exclusive automobile partner for the Olympic Games.

"Volkswagen's price cut is driven by cooling sales in the domestic car market and attacks from strong rivals," said Zhang Xin, an auto analyst with Guotai & Jun'an Securities Co.

Sales of passenger cars made in China dropped 19.27 per cent year-on-year to 177,700 units last month.

Last month, car inventories of manufactures in China exceeded 100,000 units.

Earlier this month, Nissan's joint venture with Dongfeng Motor Corp cut prices of the Sunny and Bluebird sedans by 10,000-20,000 yuan (US$1,200-2,410).

General Motors' joint venture in Shanghai last month slashed prices of the Buick Regal, Excelle and GL8 by 20,000 to 40,000 yuan (US$2,410-4,830).

"Volkswagen's move will have great impact on the domestic car market during the rest of this year as it is the biggest foreign carmaker in China. Many other manufacturers will have to follow suit to protect their market share," Zhang said.