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Competition for market share in the country's booming auto trade has intensified as Shanghai General Motors announced yesterday it would launch two new Buick sedans priced 14 percent cheaper than its current models.
Starting next month, General Motors Corp's Chinese joint venture will introduce the Buick Regal G2.5 and GL2.5 models at a cost of 243,800 yuan (US$29,455) and 263,800 yuan respectively.
The 2.5-liter models are debuting almost a month after General Motors revamped its Buick line, which included a top-of-the-line 2.98-liter engine model.
The company hopes the new models will boost 2003 sales by 20 percent.
The reduction puts the cars in the same price range as Honda Motor's new Accord and Mazda Motor's M6 sedan.
Honda's Chinese joint venture introduced the cheaper, revamped Accord last week at 259,800 yuan, 40,000 yuan cheaper than the previous model.
The past couple of years have seen several rounds of price reductions as com-petition in the car market intensifies and production capacity expands.
Last week, Shanghai GM knocked off three percent from the 89,000 yuan asking price for its Sail compact.
Other major domestic automakers, such as Dongfeng Citroen Automotive Co. Ltd. and the First Automobile Works, cut prices earlier this month to maintain market shares.
Industry analysts forecast a new wave of price cuts in March when China's auto imports and new model launches reach their peak.
Peter So, head of China research for the ING Group, said that automobile sales in China are expected to leap from last year's 3.2 million units to more than 4.7 million units in 2004.
He attributed the growth to the increasing individual income and the introduction of new policies to accelerate the demand.
So added the market will grow 47 percent over the next two years, driven mainly by the fast-growing sedan segment. Sedans currently account for 35 to 40 percent of total sales volume.
"As a rule, the demand in other countries starts to soar as per capita GDP rises above US$1,000. China is no exception," he said.
China's per capita GDP reached US$945 last year, compared with US$911 in 2001.
For sedans, the current penetration rate in the country's urban areas remains between 1 and 2 percent, nearly the lowest among developing countries, due to the prevailing low per capita income level, the ING researcher said.
As the auto sector is one of China's pillar industries for development, officials expect the government will unveil more favorable policies to stimulate consumption.
Globally, China's profile in the automobile sector has risen significantly in recent years. The China's mainland accounted for 4.14 percent of the world's total production in 2001, compared with 3.61 percent a year earlier.
(Shanghai Daily January 23, 2003)
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