A new round of price-cutting in China's over-supplied car market was
heralded by Shanghai Volkswagen's decision to slash the price for its
Passat Lingyu model. The price cuts range from RMB7,000 to RMB16,200
for the Passat Lingyu, which currently sells for between RMB176,800
and RMB301,800.
Earlier this year, Shanghai Volkswagen slashed the prices of several
models by as much as 11 per cent. The main driver behind the cuts is
an oversupply of manufactured cars in a fragmented marketplace. China
has one of the largest automobile markets in the world, with the most
players, both domestic and foreign. Competition for customers is
getting ever fiercer, presaging price cuts and talk of consolidation
(see our article about Nanjing Autos and SAIC merger discussions).
Shanghai Volkswagen is a joint venture between Germany's Volkswagen
and China's biggest automaker, Shanghai Automotive Industry Co. The JV
sold more than 216,000 units in the first half of 2007, a 34 per cent
increase compared to last year.
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