The recent slowing of the vehicle market in China has prompted carmakers to join a new round of price wars across several market segments.
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The Shanghai Daily said the return of the price wars has ended an upswing in car prices since the beginning of this year, triggered largely by higher raw material costs.
The price reductions have also triggered market concerns that the sustained growth of the whole industry could be damaged, which would further erode carmakers’ already declining profits.
The Shanghai Daily said that FAW-Volkswagen has announced price cuts of 10,000 yuan (US$1,460) to 19,000 yuan on its mainstream models.
The price discounts covered the Bora and Golf as well as Sagitar mid-class sedan and the Magotan, the report said.
The newspaper said that the price cuts have been widely touted as the first shot in an imminent price war among China’s automakers. It has also intensified market competition ahead of the prime sales season in September and October.
FAW-VW’s price cuts have been followed by Chang’an Ford Mazda Automobile Co Ltd, which cut the price of its Mondeo sedan by up to 20,000 yuan, or 12 percent, to enhance its competitiveness against rivals such as Toyota’s Camry and Honda’s Accord.
China’s car market is continuing to cool in response to higher gasoline prices and weakening consumer confidence. It was down on year-ago levels in the months of July and August, though cumulative sales this year remain 13% up.
See also: ANALYSIS: China car sales slow in July
