CRI听力:The Price Drop of Luxury Cars in the Chinese Market

High-end car dealerships in Hangzhou are currently involved in a price war.

Take a 930 thousand yuan Mercedes Benz S300 for example. Dealers are now offering up to 30% off, amounting to 280 thousand yuan, which would allow the buyer to purchase another middle-priced car.

The Lexus RX series also enjoys tempting discounts - Some dealers offering a discount of 86 thousand yuan.

Hu Yahui, Deputy General Manager of a luxury car dealership in Hangzhou, says that besides offering discounted prices, they also provide other perks to customers.

"We also buy insurance for the customers, throw in regular car maintenance for free and have even given buyers an iphone 4s as a gift."

So, why are the dealers in such a rush to sell these cars? Experts believe that the dealers want to empty their stock and recoup funds to buy new models issued during the first quarter of the year.

However, automobile analyst Wang Yinglai says the dramatic price drop is in fact due to the price bubble for luxury cars within China.

"There is a huge price difference in the prices of luxury cars sold in China and those sold abroad. For instance, an Audi Q7 sells for at least 900 thousand yuan in China, but it sells for 400 thousand yuan in the foreign market. The price difference is as high as 500 thousand."

Research has revealed that the prices of luxury cars sold in China are much higher than those sold in foreign countries.

The sticker price of a Top of the range Ranger Rover is the equivalent of 917 thousand yuan in Britain. Its dutiable price when coming into China should be 1.7 million yuan, but its official sticker price is almost 2.2 million yuan in the Chinese market. 

In response to this, auto dealers have said that the profit they make from selling one car is about 3% of the sticker price. Therefore, the automobile import companies are making a fortune due to the huge profit margin.

Industry insiders have suggested that though the prices of middle and low end cars have not eased as of yet, they are all likely to be affected by the price drop of luxury cars.

For CRI, I'm Wang Wei.