Auto Industry in China Facing Sluggish Market
    2012-06-14 09:06:46         Web Editor: Mao

Even though a turnaround in the industry is expected later this year here in China, both domestic and international auto manufacturers are struggling to find sales, despite moves recently to slash prices.

CRI's Liu Min has more.

Beijing Yayuncun Auto Trading Market, the largest automobile trading center in Asia used to see customers flocking in to bargain with dealers. But the downturn has been going on for a while now. Dealership managers from both Chinese and foreign auto companies say they've provided huge discounts to compete for a limited number of customers.

A dealership manager selling domestic brand cars gives his opinion.

"We've cut one to three thousand yuan in prices. It's not just us. Some imported cars are losing money as they have a larger stock of vehicles."

Higher end cars such as Benz, BMW, and Audi used to put prices up during peak season, but now they've totally given up on the idea. Manager Zhang Xiaojun from FAW-Audi says they are expecting to see fiercer competition among auto manufacturers this year. 

"The production capacity of higher-end cars is quite powerful, so their competition is quite tense. This situation will continue for quite some time, which forces us to reduce prices."

China has seen rapid growth in the auto industry in recent years with the largest consumer market in the world. However, since last year, sales volume has shown a downward trend.

Not just first-tier cities like Beijing Shanghai and Guangzhou, but also second and third tier cities in inland China have seen droping sales. Dong Yang, the Executive Vice President of the China Auto Industry Association echoes the report.

"If we look at the whole market over time, then the situation at the beginning of this year was quite tense. But the trend was a bit better when it came to March and April. If we look at it based on types of vehicles, then passenger cars and sedan cars are selling better. But types like freight vehicles and specialized vehicles for construction have seen sharp drops in sales."

Dong Yang predicts that it will be hard to achieve rapid development in the industry similar to the previous years but remains optimistic about the future.

"Some people in the industry predict that the Chinese auto industry will see a disastrous situation very soon, but our estimation is the opposite. Auto manufacturers, especially domestic brands, need to think about how to have sustainable development, for example, how to improve their product quality, cultivate new models, and control cost. This would be good for restructuring and upgrading their enterprises."

Auto industry experts point out that China has entered an era of fierce competition between domestic and foreign brands. The point of contention is price versus brand, with reputation winning out. Manager Wu Xinfa from Dongfeng Yulong Auto Company says they've found their way to compete.

"Our focus is our product, a car that can provide a better experience, more special than other cars. Personalized services and the driving experience should be a new sales point."

For those who want to purchase a car this year, car dealers say that prices may also see a further drop in the upcoming months since auto manufacturers are promoting their new models, trying to sell their old stock as soon as possible.

For CRI, I'm Liu Min.


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