(Yicai Global) March 22 -- China’s auto manufacturers need to rein in their price reductions to bring the industry back to normal and ensure healthy and stable growth this year, the China Association of Automobile Manufacturers said today.
Cutting prices is a normal measure taken to lower inventory, but it must not descend into a price war, the association said on its WeChat account. Local governments need to take appropriate measures to stabilize growth and boost consumption.
Almost 30 auto manufacturers, including BYD, Germany’s BMW and Japan’s Honda, have been rolling out price cuts of up to CNY100,000 (USD14,514) per vehicle this year to boost sales. With the support of the Hubei provincial government, Dongfeng Motor is subsidizing 58 of its models across seven brands, some as much as half the ticket price.
Many sellers are exaggerating their price reductions, which are mainly aimed at out-of-date models, so as to attract attention and this can mislead consumers, the association said. Consumers need to make choices based on actual scenarios and demand, it said.
Traditional carmakers are investing heavily in electrification, intelligentization and networking to keep up with the upgrading of the automotive industry, the association said. So they are under pressure to not only upgrade, but to also maintain stable operations, resulting in low profitability.
Despite the rapid growth of new energy vehicles in the country, fossil fuel-powered cars are upgrading fast and the two will continue to coexist for a long time, it added.
Editor: Kim Taylor