Mini car prices will continue to rise under tough cost pressures

Shanghai, May 5 (Gasgoo.com) Prices of mini cars in China's capital city Beijing rose by 1,000 yuan (US$142.80) to 4,000 yuan in the past month, and this price hike is forecast to continue in the remaining part of this year, an official from Changan Automobile said.

"We are pricing some new models at 1,000 yuan or 2,000 yuan higher than initially planned so as to absorb the surging costs," said Xu Liuping, president of Changan Automobile.

The automaker is also trying to lower down cost by deleting standard configurations, such as ABS and EBD on its existing Benben mini car.

Chery, the nation's fourth largest car maker, announced to add an average 1,000 yuan (US$142.80) to 3,000 yuan on its mainstream products including QQ subcompacts, Tiggo sport utility vehicles and Easter Cross sedans starting April.

In an interview with Shanghai Daily, Wang Zhihui, an auto analyst from China International Capital Corporation Limited, said mini car models were hit hardest by the surging steel price while the impact was negligible on profitable mid- to high-end cars.

The profit margin of small cars with an engine capacity of about one liter could drop 16.5 percent compared to a 4.3 percent drop for an economy sedan, according to Wang.