VW joins China price war as new emissions rules loom

VW joins China price war as new emissions rules loom

BEIJING – SAIC Volkswagen Automotive Co. is offering 3.7 billion yuan ($537 million) in cash subsidies for car purchases in China, more than 40% of the reduction in prices before emissions rules changes in the world’s biggest auto market. Join the brands.

SAIC-VW said the joint venture between China’s SAIC Motor Corp Ltd and Germany’s Volkswagen AG is offering 15,000 yuan ($2,177) to 50,000 yuan ($7,258) in subsidies until April 30, including Teramont, Lavida and Phideon models included. on his WeChat account late Thursday night.

Guangzhou Automobile Group, the Chinese partner of both Honda Motor Co Ltd and Toyota Motor Corp, has also offered subsidies running from March 15 to March 31.

Chinese passenger vehicle sales fell 20% in January-February, industry data showed, even as some makers offered lower prices to stimulate demand.

Sales of new energy vehicles, which include all-battery and plug-in battery-petrol hybrid vehicles, grew faster than the overall market, accounting for more than 30% in February. In the same month, Chinese electric vehicle maker BYD Co Ltd outpaced Volkswagen-branded cars for the second month in four.

Fitch Ratings analysts said in a client note on Thursday that the government’s plans for an auto emissions standard to take effect from July 1 have increased pressure on automakers and dealers to clear inventory of vehicles that do not meet the standard .

“There is no other way to describe what is happening other than a catastrophic decline in the performance of multi-national ICE (internal combustion engine) brands,” said Shanghai-based Bill Russo of consultancy Automobility.

The price war is likely to accelerate the consolidation of the fragmented local auto industry, which has more than 130 passenger car makers, state-owned newspaper Economic Daily said in a commentary on Friday.

But it could also hurt profitability and innovation and stall the growth of the overall sector, which is a pillar of the economy, the paper said.

Local governments are providing incentives to revive demand for cars produced by local automakers. Central Hubei province and state-backed Dongfeng Motor Group Co Ltd have jointly offered subsidies of up to 90,000 yuan, or 40% of the list price, for the entry-level Citroën C6 sedan produced by its joint venture with Stellantis NV.

($1 = 6.8923 Chinese Yuan Renminbi)

(Reporting by Zhang Yan and Brenda Goh; Editing by Himani Sarkar and Christopher Cushing)

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