Shanghai Volkswagen Corporation announced last Friday that it would cut the price of its domestically made Audi A4 to 65,000 yuan (US$7,860), launching a luxury car price-cutting race.

Experts said Audi A4 cut its price below 300,000 yuan (US$36,200) in order to compete with Guangzhou Honda, which lowered its price to less than 350,000 yuan (US$42,300) on September 28, according to Beijing Morning Post.

Audi A6's price in China is now close to what it is in Germany and nearly 2,000 US dollars' cheaper than the brand in the United States.

China's low and middle class cars experienced price dropping storm in June this year in a bid to shoot for more buyers. Luxury cars such as Mercedes Benz, BMW, VOLVO and Audi have seen their prices remain unchanged.

"The luxury car market won't go through price dropping. It won' t attract people by lower price, no matter how cheap the economic cars are," Andreas Beges, the executive director of Audi China once said.

In fact, statistics show that from January to September this year, the sales volume of luxury cars pricing over 300,000 yuan (US$36,200) had dropped about 19 percent over the same period last year, reversing its strong selling record maintained in the previous years.

Homemade Audi A4 had poorer selling record than Audi A6 in China, because it cost the same as the higher-quality Audi A6, said a marketing staff in Central China's Hunan Province.

"If the price of homemade luxury cars is too high, consumers will prefer imported ones with the same price level, and that may be the reason of homemade luxury cars didn't sell well," said Hu Yi, a Audi A6 buyer after its price cut at Yayuncun Auto Market.

In 2003, Chinese owned 4.89 million private cars, 42.56 percent more than the previous year.

According to Beijing Traffic Administration, the number of registered motor vehicles in Beijing doubled in only seven years from 1997 to 2003. Of the 1.28 million private-owned vehicles in Beijing, more than 800,000 are cars, according to Zhang Jingli, deputy director of the traffic administration.

(Xinhua News Agency October 12, 2004)