Volkswagen Lowers Prices in China

By: Jenny Mclane

It is a known fact that car makers are always looking for ways to expand their market to boost profit. Recently, most car makers are investing in Asia, particularly in the Indian and Chinese markets where the demand for automobile has increased significantly in the past few years.

The number of competing brands in the Chinese market has increased competition and different marketing strategies are being employed by these car makers. Recently, Volkswagen reported that they have cut down the price of their automobiles for sale in China. This is an effort to make their vehicles more accessible to a large number of Chinese car buyers. The country with its huge population and increasingly growth in terms of economics has been a good place for car makers like Volkswagen to do business in.

Shanghai Volkswagen, the Chinese subsidiary of German Volkswagen AG, recoded 65,000 vehicles sold for the first two months of the year. The figure is 41 percent higher than their sales for January and February of 2006.

In order for the company to sell more products and to tighten its grip on the Chinese market, they have implemented the price reduction scheme. The parent company of Shanghai Volkswagen reported that they have reduced the price of their vehicles by as much as 11,000 yuan or $1,420. The reduction involves different models like the Volkswagen Polo and Santana.

The move by the company is hoped to spark more interest on their product among Chinese car buyers. Of course, the performance and overall features of their vehicles also plays a key role in selling the vehicles. With precision made engines and other components integrated into Volkswagen's cars of high quality like , it can be expected that more and more Chinese will be opting for a Volkswagen in the coming months.

The reduction of the price of Volkswagen models came after its rival, Shanghai GM, announced earlier this year that they have cut down the sticker price of their models. Shanghai GM is the Chinese arm of the world's largest car manufacturer, General Motors. The company sold 67,500 vehicles for the first two months of the year. This is an increase of 39 percent from last year's sales for January and February. The company announced that they have cut down as much as ten percent from the prices of their domestically produced vehicles like the Chevrolet Lova and the Aveo.

The reduction of sticker price by these two car companies shows that the competition in the Chinese auto market is intense. While the country is economically improving thus making it a strong market for automobiles, the competition has become so intense when car manufacturers increased their production for the region.

The result, of course, is a huge number of cars that needs to be sold and one way of selling them fast is to lower their price. In the end, Chinese car buyers will be most benefited by these moves from General Motors and Volkswagen.

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