On the heels of slumping sales, Shanghai GM — General Motors’ primary joint venture in China with the SAIC Motor Corporation responsible for the Chevrolet, Buick, and Cadillac brands — has announced cuts in the prices of its vehicles.
The cuts span 40 models across the three brands, with some cuts being for as much as 53,900 yuan ($8,700).
In April 2015, Shanghai GM sales dropped 6.7 percent year-over-year to 119,032 units:
- Buick sales were down 8.5 percent to 63,307 units
- Chevrolet sales were down 5.6 percent to 49,528 units
- Cadillac sales were up 4.6 percent to 6,197 units
The growth of the Chinese auto industry has been been slowing, with April seeing the slowest passenger vehicle sales growth in five months. The slowing growth pace has placed increasing pressure on foreign automakers in the country, as local brands that offer cheaper vehicles see the most growth.
“In years to come we expect 2015 to be known as the start of China’s Great Moderation,’ as pricing and margins fall from levels far above global norms,” Robin Zhu, senior analyst at Sanford C. Bernstein Ltd., wrote in a report today.
Zhou believes that the effects of a drop in Chinese market profitability “may be substantial”.
Outside of the discounts, foreign automakers are offering other incentives such as subsidized insurance, zero down payment programs, interest-free financing, exemption of purchase tax and trade-in subsidies.