Toyota Motor Corp. Chinese partner, Tianjin FAW Xiali Automobile Co., has announced another round of price cuts, leading price reductions in the car sector.
According to Dow Jones, last year alone, Xiali announced three rounds of price cuts, putting pressure on the overall market. Its latest cuts ranging from 2,000 yuan to CNY6,000 on four different models will take effect on Friday.
The price for Xiali’s TJ7101G hatchback, reduced to CNY41,800 from CNY43,800 in November, will be cut again to CNY39,800, Dow Jones said.
The base TJ7101 hatchback model’s price will be reduced to CNY37,800 from CNY39,800; the four-cylinder TJ7131A hatchback model will be sold at CNY51,800, down from CNY57,800, while the four-cylinder TJ7131AU sedan will be priced at CNY58,800 from CNY64,800.
The moves do not appear to be a desperation move. According to Dow Jones, Tianjin FAW Xiali posted a net profit of CNY469.4 million in the first nine months last year against a previous year loss of CNY582.6 million, mostly thanks to sales by its joint venture with Toyota, which posted a net profit of CNY793.7 million in the first nine months.
Dow Jones said Analysts have been expecting price cuts to continue this year. Jian Sun, a principal at A.T. kearney in Shanghai, is reportedly forecasting an average 8%-10% price cut this year, similar to last year’s price reductions.