Economic Cuts, Rising Fuel Could Trigger China Auto Sales to Miss Targets
Chinese car aficionados who have been long eyeing that Daimler, Volkwagen and BMW, among a few, may very well decide to purchase that dream car now as Western automobile makers may likely reduce certain percentages off the selling price of their products in a bid to meet sales quotas amid the economic cuts and rising fuel costs in China.
On Tuesday, Gu Xianghua, one of two deputies to the secretary general at the state-backed China Association of Automobile Manufacturers (CAAM), in a conference in Qingdao, said sales of vehicles in China may fail to reach by even 5 per cent this year owing to the challenging economic situation that the world's second-largest economy is facing.
Earlier, the association had forecast total car sales this year will grow by 8 per cent.
Worse, CAAM said that among the type of automobiles sold in the market, it will be the commercial vehicle types that will be the hardest hit.
Immediately after CAAM's pronouncement, shares of BMW and Daimler dropped more than 3.5 per cent at the Stoxx Europe 600 Index.
BMW, the world's largest maker of luxury vehicles, fell 4.5 per cent to 68.63 euros, while Daimler AG fell 3.9 per cent to 45.27 euros. Volkswagen AG plummeted 3.8 per cent to 133.95 euros, Porsche SE down 3 per cent to 45.10 euros and Continental AG plunged 4.9 per cent to 68.29 euros, data from Bloomberg News showed.
Cheshi.com, a website that monitors car prices at more than 3,000 dealerships in China, said the Mercedes-Benz of BMW and Audi of VW are now offered at 20 per cent off or more the original price, just to entice consumers to continue patronizing the product and buying automobiles. According to cheshi.com, Mercedes is extending 25 per cent discounts on the S-Class. BMW's 7-series and Audi's A8 were being given for 20 per cent below sticker prices, with inclusive perks ranging from free iPhones to Hermes-bag coupons.
China is VW's biggest market, and third-largest for BMW and Mercedes.
Total January and February automobile sales have been down by nearly 6 per cent.