General Motors is reported to have cut prices on two of its Chinese-made models by up to 10% to boost sales, a move that could force similar cuts by rivals in the world’s second largest car market.

“Auto makers here tend to slash prices at the beginning of the year to attract buyers,” Xie Shuguang, senior analyst with Shanghai Securities, told Reuters, adding: “Now that Shanghai GM has taken the lead, more will follow soon.”

Shanghai GM on Friday said it had reduced prices of its Chevrolet Lova and Aveo economy cars by as much as 9,900 yuan ($US1,268) starting this year, the report said. The venture shipped 413,367 cars in China last year, up from 325,429 in 2005. At the start of last year, it cut Chinese prices on two medium-to-higher-end models by as much as 10%.

Shanghai GM reportedly did not disclose its full-year earnings or explain how the price cuts would affect margins but a source close to the company told Reuters late last year that the venture was likely to book between 4.5bn and 5bn yuan of net profit for 2006, and earnings for 2007 would be no less.