Cut-throat competition in the domestic compact car market is expected to intensify following Monday's launch of the Polo manufactured by Shanghai Volkswagen (SVW).
With a price tag ranging from 127,500 yuan (US$15,400) to 148,000 yuan (US$17,830), the 1.4-litre model is billed by SVW as China's first premium compact car.
Its primary targets are comparatively well-to-do Chinese consumers who prefer individualized consumption.
A major selling point of the Polo is that it was launched on the domestic market almost simultaneously with its unveiling in Europe, guaranteeing customers the latest technologies.
"Polo will hopefully set a totally new benchmark for family cars in China," said Ralf Laudenbach, deputy managing director of SVW, a 50-50 joint venture between Volkswagen and Shanghai Automotive Industry (Group) Company (SAIC).
"SVW doesn't want to be only a price model; we would rather act as a technology innovator on the market."
He was referring to lingering doubts that consumers may be put off by Polo's comparatively higher price than rivals such as Sail of Shanghai General Motors and Palio of Nanjing Fiat.
While prices of the 1.6-litre Sail range from 92,800 yuan (US$11,200) to 129,800 yuan (US$15,700), the Palio is priced between 95,900 yuan (US$11,600) and 111,900 yuan (US$13,500).
Analysts predict passenger car sales in China will reach 750,000 to 900,000 units this year, an increase of between 7 and 10 percent on the previous year.
This is mainly due to the country's burgeoning middle class who desire modern mobility, yet many agree that price is still a primary factor that influences consumer purchases of cars.
"We don't view Polo as a mere economy car because of the technologies it uses so we won't be engaged in competition with other low-priced economy cars on the market," said Xiao Guopu, general manager of SAIC-Volkswagen Sales Co Ltd, SVW's sole sales agent.
The market seems to be encouraging right now for SVW.
Since it began to accept orders for the Polo on March 25, SAIC-Volkswagen Sales has netted around 6,000 orders nationwide in just two weeks, Xiao said. SVW hopes to sell 30,000 units this year through more than 700 sales outlets nationwide.
But analysts have shown a degree of concern over the market prospect of the car.
"It will still take time to see whether people at large will accept the Polo because its price is higher than many rivals," said Gan Wenjia, a local analyst.
SVW plans to start manufacturing the 1.6-litre Polo later this year with revised versions of the model expected to follow.
(China Daily April 09, 2002)
