International car manufacturers slashed prices of cars, they respond to the slowdown in demand in China, the threat to the rich profit margins industry sold.
General Motors Corp. and Ford Motor Co. cut the price of China's car late last week, following last month to increase the movement of the Volkswagen Group for several popular car discounts.
"What price adjustment, we need to do some day," GM China chief executive officer told Reuters correspondent Matt Qian. "The market is weaker than it has been in the past."
Analysts said the unusually large price cuts - up to fifth - GM and its rivals point to longer-term challenges, China's consumers are increasingly resisting pay double or triple charge similar or identical cars in the price the United States and Europe.
At the same time, car manufacturers are adding more capacity to the world's largest auto market by sales volume, despite the sharp slowdown in sales growth.
GM's price cuts will shrink in the same period a year after its sales in China in April. Sales GM and its Chinese joint venture fell by 0.4% last month demand in its biggest brands all fell. Its sales Wuling, Buick and Chevrolet brands decreased by 5.1%, 8.5% and 5.6%, respectively.
"This is a permanent move down the price," James Chao, Shanghai Asia Pacific industry consultant IHS Automotive Managing Director said, "there is a tendency to make the signs."
GM last week cut prices 40 different models. In one case, GM and SAIC joint venture partners to reduce some of the Chevrolet Captiva SUV in price from 53,900 yuan ($ 8,687.80), or 20 percent, to 209,900 yuan. GM said it cut Copaci price - due to be refreshed aging model - because it is not like Nissan's more expensive competitors.
Chinese consumers "know more and more, they did not get a car given a fair price compared to their counterparts in the United States and elsewhere," said Zhang Yu, Shanghai-based consulting firm Automotive Leader forward he said.
Ford on Friday 40,000 yuan, or more than 8% reduction in the price of the Ford Explorer SUV. In April, Volkswagen and SAIC, also a joint venture partner, and China FAW Group Corporation, began offering discounts, interest-free loans and other transactions in order to promote sales of sweeteners Volkswagen brand models.
Tsien said GM's goal is to maintain its operating margin was 9% ~ 10%, mature even in the Chinese market, in part by selling more inclined to SUVs and luxury cars.
"To think that you will have double-digit growth every quarter. I do not think this is the industry-led," he said.
Sales slowdown may exacerbate the imbalance between production capacity and demand increasing, said Chao, an analyst at the IHS.
"New production capacity coming on stream by the automobile manufacturer, now and in the next few years, just as the market has begun to see some real weaknesses," he said. "This is worrying."
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