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New Law Will Reduce Car Prices for Chinese Buyers

2008-08-08    Source:english.chinabuses.com

CAR buyers are likely to be the big winners after new Chinese anti-monopoly laws took effect at the beginning of this month.


"Dealers will have bigger say on setting car prices," said Renald Sui, general manager of Shanghai Debao Motor Service Co, a BMW dealer.


"Car prices are expected to drop amid the furious price competition, which could benefit consumers," he said.


"On the other hand, it may also lead to financial problems for dealers and could possibly ignite a consolidation among dealers."


Some dealers of Guangzhou Toyota Motor Co's vehicles have already begun to mark down prices.


In their sales promotion, the Camry models have been marked down by an average of about 16,000 yuan (US$2,350) off the 197,800 yuan to 269,800 yuan price range previously set by the car maker.


Guangzhou Toyota also said it would support dealers to offer price discounts, making it the first car maker to loosen its tight pricing controls.


"The new law will be by no means confined to price adjustment. It will apply across all segments of the auto industry, from manufacturing through to sales and after-sales services," according to Feng Xingya, the company's deputy general manger.


The new laws, designed to increase transparency in the auto industry, challenges existing trade practices. Car makers used to set prices as part of their overall marketing strategy.


Dealers may now set their own prices, and can also branch out to sell cars to buyers from outside their sales region.


Local governments will also no longer be allowed to force companies to buy cars made by domestic makers as part of the government procurement programs, and this will create opportunities for car makers previously uncovered by the government procurement programs.


Other changes will dilute the dominance of authorized dealers in the after-sales market. Repairs and maintenance, with cheaper spare parts, can now be offered by other dealers.


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