China Car Maker Brilliance Lowers Zhonghua Sedan Prices

HONG KONG, May 27, 2003; Reuters reported that Chinese automobile maker Brilliance China Automotive Holdings CBA.N said on Tuesday it had cut prices of its manual-transmission Zhonghua sedans by up to 6.5 percent to clear stocks before it launches a new version.

"We have stock of about 1,500 manual sedans and we would like to clear it up before the launch of new manual versions with improved interior designs later this year," Elsie Chan, vice-president of Brilliance, told Reuters.

China's largest minivan maker only started making the sedan last year and has recently signed a deal to start producing luxury model sedans in China with Germany's BMW BMW.DE .

The company, controlled by the government of Liaoning province in northeastern China, slashed sales prices for 2.0 litre and 2.4 litre manual sedans by 11,000 yuan (US$1,329). The cars now cost 157,800 yuan and 177,800 yuan, respectively.

"The cut will directly affect their profit margins since costs for Chinese car manufacturers are unlikely to be significantly cut," said Deutsche Bank analyst Lawrence Ang.

Competition in China's car market is increasing as production surges and tariffs on imported cars decline after China entered the World Trade Organisation.

China's car output leapt 110 percent in the first four months of 2003 from a year ago to 565,400.

Chan said Brilliance's newly launched 2.0 litre automatic Zhonghua sedan will keep its 188,600 yuan price tag. New versions of the firm's manual Zhonghua sedans will be priced at 168,800 yuan and 177,800 yuan when they hit the market later this year -- the same pre-discount price as the earlier models.

Privately-owned Geely Group said earlier on Tuesday that it had reduced prices on all of its cars by 1,000-6,000 yuan.

Guangzhou Honda, a joint venture between Japan's Honda Motor and Denway Motor , took the price-cutting lead in January by launching its 2.4 litre Accord sedans at a price 12.8 percent cheaper than its previous model.