Second Hand Car Prices

 Though Volkswagen has refused the rumour of "normal price hikes in April" because of its passenger cars in China, speculations for car cost raises in China continue to be rampant.

Mr Rao Da, Secretary-General of National Passenger Car Information Change Association, suggested that car cost inflection factors might look this season or the next. Due to increasing fresh products and labour expenses, it is estimated that price per vehicle might improve by 1500 to 3000 yuan (RMB:USD = 7:1) in 2008. Actually for upgraded versions, the cost might however increase as a result of associated moulding, checking and machinery tools. Nevertheless the brutal competition in China's automobile market has deterred most auto businesses from unilateral cost hikes.

Hidden price hikes

As clear value raises may possibly attract resentment from customers, several producers are now launching new models to acquire larger prices. And some enhanced types may also be ultimately raising rates with the addition of on additional accessories. An market veteran revealed that many alleged annual upgraded models are essentially just like the previous designs, with only a number of accessories, but much higher prices. In addition, many auto merchants may also be selling added accessories to create added profits.

One sales supervisor from a branded supplier store unveiled that in recent years, because the Asian car industry is becoming more and more aggressive, vehicle prices have now been on a downward trend. Therefore several automakers and merchants are seeking every way to recoup the edges, with "compulsory add-ons" being the most significant one. Merchants will also be adjusting some vehicle buyers' desperation to take delivery of the car, by encouraging them to purchase add-ons to accelerate the delivery process. It is noted that margins on decorative components can be as large as 30-40%, and profits from selling ornamental services and products for five cars are just like selling one whole car.

Specialists remarked that although most automakers are freely stating they can absorb the improved production costs, the small profit of car production has built them hard to take action in the small term. As a result, in order to keep consitently the profit stable, indirect price walks can function as instant solution.

Price inflection stage coming?

"As domestic material cost has improved 500 yuan per ton, cost of making a moderate measurement vehicle should increase by 1000 yuan correspondingly. And higher labour charges in China will also drive up producers' costs. Every one of these costs aren't that simple to be absorbed by companies," Mr Rao Da regarded that as the planet is currently on an inflation journey, China will not be immune.

Despite the bullish melody for vehicle value hikes, there are also several sceptics. On one give, because of the growing CPI, metal and fat prices, vehicle manufacturing charges are getting up, putting huge stress on automakers in China. On the other give, the extended decreasing value trend, scientific improvement and industry saturation have been lowering vehicle rates again and again. Most customers already are applied to cheaper vehicles, a cost rise is anything alongside unacceptable.

Several vehicle suppliers are really cautious about price increases, which is actually a landmine for anyone. The individual vehicle industry of China has become really competitive, but businesses remain increasing their capacities. It is estimated that by 2010, annual vehicle productivity volume in China may reach 20 million models, almost increasing the estimated need in the exact same period. That forecasted capacity surplus has located concerns around the possibility of any value hikes.

Customer voting using their feet

A consumer study on "whether vehicle prices will increase" unmasked that 71.5% respondents didn't think there would be any price increases in 2008, against 13.5% saying "possible hikes" ;.On the list of 3000 respondents, 65.3% said that car cost hikes will surely influence their buy programs, against only 20% stating "maybe not affected" ;.Car Review & Pictures

Newest data from China Vehicle Market Association revealed that despite vehicle sales size growth had slowed up from 25.3% in 2006 to 22% in 2007, gains had grown 65% in exactly the same period. Total profits had exceeded 100 thousand yuan, among which 61 million yuan were added by the utmost effective 16 primary manufacturers. Gain development for these leaders has exceeded their revenue development charges, showing improved business performance.

It's projected that China's vehicle sales volume in 2008 may reach 10.28 million items, a 17% improve from last year. Albeit the growing steel and labour fees, gain development for the Asian vehicle market remains likely to be 32% that year. But the world automotive history has shown that whenever a vehicle industry enters a mature point, the complete industry's profitability will certainly decline. Against this foundation, any plan to go charge demands to customers is probably not feasible.