(Yicai Global) June 7 -- Changan Automobile has refuted claims that the Chinese vehicle manufacturer has been cutting payments to some of its suppliers by 10 percent.

Changan Auto negotiates prices with its suppliers every year, but once a contract is signed, the price is set and the firm will pay the full amount due, the Chongqing-based carmaker said today.

Changan Auto allegedly informed hundreds of suppliers on March 28 that they will only be paid 90 percent of their bills due to difficulties caused by the price war in the country’s car sector and that other vehicle makers plan to follow suit, according to a letter circulating online that was apparently written by a group of suppliers and delivered to the firm’s procurement department.

Changan Auto said it has not received any such letter. It has reported the case to the police and reserves the right to take legal action if its business reputation and goodwill are damaged, it added.

Yicai Global called several Changan Auto suppliers today, and all of them said they have never heard of such a practice and have not seen this letter.

Despite the price war, Changan Auto’s car sales surged 57.2 percent in April from a year ago to 181,980 units, according to a sales report it released last month. In the first four months it shifted 789,788 vehicles, a gain of 2.9 percent from a year earlier.

However, some of the company’s joint ventures logged sizeable declines in sales over the four-month period. Changan Ford Automobile posted a 18.6 percent year-on-year drop and Changan Mazda Automobile 59.8 percent.

US electric car giant Tesla slashed the price of its new energy vehicles in China at the start of the year, precipitating a price war that has not only affected the NEV market but also that of conventional fossil fuel-powered cars.

Editors: Tang Shihua, Kim Taylor