Volkswagen joins the price war in China before the imminent new emissions standard

Volkswagen joins the price war in China before the imminent new emissions standard

SAIC Volkswagen Automotive Co is offering 3.700 billion yuan ($537 million) in cash grants for car purchases in China, joining more than 40 brands in cutting prices ahead of a change in emissions standards in the world’s biggest car market.

The joint venture between China’s SAIC Motor Corp Ltd and Germany’s Volkswagen AG is offering 15,000 yuan to 50,000 yuan in subsidies until April 30 for its full lineup, which includes the Teramont, Lavida and Phideon models, SAIC-VW said on its WeChat account late on Thursday.

Guangzhou Automobile Group, the Chinese partner of Honda Motor (TYO:7267) Co Ltd and Toyota Motor (TYO:7203) Corp, has also offered grants from March 15 to 31.

Chinese passenger car sales fell 20 percent in January-February, according to industry data, even though some manufacturers offered reduced prices to stimulate demand.

Sales of new energy vehicles, which include battery vehicles and battery-gasoline plug-in hybrids, grew faster than the overall market, at more than 30% in February. That same month, Chinese electric vehicle maker BYD Co Ltd outsold Volkswagen-branded cars for the second month in a row.

The government’s plans for a stricter car emissions standard from July 1 have added pressure on automakers and dealers to clean up inventories of vehicles that don’t meet the standard, analysts at Fitch Ratings said in a note to the client on Thursday.

(1 dollar = 6.8923 Chinese renminbi yuan)

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