Luxury cars kick off fierce price war in China

Shanghai August 11 (Gasgoo.com) As demand in the world's largest auto market gets weaker from year-earlier levels in the second half of this year, luxury cars in China have kicked off a price war, and August sees a even bigger price cut, media reported Wednesday.

Reporters have recently learned from the Beijing auto market that many automakers have cut prices on the old models, and some imported models to make way for the newly launched cars, with thousands of yuan cut on one car and even more on imported vehicles.

Price of the imported Mercedes E200 has been lowered to around 400,000 yuan ($77,000) in one Mercedes-Benz dealership in Beijing, with as much as 80,000 yuan cut, only to make room for the newly launched Mercedes E-Class sedan in the market. 

Moreover, the reporters found in one BMW dealership that price of the stretched BMW 5 Series launched last week was cut as well. Big discounts have also been given to the old BMW 5 Series, of which the BMW 520Li stood at below 400,000 yuan with 60,000 yuan reduced.

Of all the luxury cars sucked into the price war, the biggest discounts have been given to the Volvo cars that are now under control of China's Geely Group. Consumers of the Volvo XC90 can get a discount of 90,000 yuan, and those of the Volvo XC60, S80L and S40 are offered a discount of 40,000 yuan.

Apart from that, data from a luxury carmaker in China show that prices of the 2.0L Audi A4L , the BMW 320 and the Mercedes C200K dropped 1.9%, 9.9% and 12.8% respectively in the first half of this year.

However, the data indicate that the price war did not affect luxury cars' market share too much. The Audi A4L, the BMW 3 Series, the Mercedes C-Class and the Lexus IS still hold 46%, 27%, 20% and 4% of the market share respectively in China's auto market.

In the higher-end luxury car market, the Audi A6L hold 51% of the market share, followed by the Mercedes E-Class (15%), the BMW 5 Series (14%), the Lexus ES (13%) and the Volvo S80L (4%).

Seeing the large reduction in car prices and the increasing inventory, industry experts say 50% of the dealers may sled into the red in the second half.