BEIJING – SAIC Volkswagen Automotive Co. is offering 3.7 billion yuan ($537 million) in cash subsidies for car purchases in China, joining more than 40 brands in cutting prices ahead of changes to emissions rules in the world’s biggest auto market. The joint venture between China’s SAIC Motor Corp Ltd and Germany’s Volkswagen AG is offering subsidies of 15,000 yuan ($2,177) to 50,000 yuan ($7,258) for its entire lineup until April 30, Terramont, Levida, and PHIC said. on his WeChat account late Thursday night. Guangzhou Automobile Group, the Chinese partner of both Honda Motor Co Ltd and Toyota Motor Corp, has also offered subsidies running from March 15 to March 31. China’s passenger vehicle sales fell 20% in January-February, industry data showed, even as some manufacturers offered reduced prices to stimulate demand. Sales of new energy vehicles, including all-battery and plug-in battery-petrol hybrid vehicles, grew faster than the overall market, up more than 30% in February. In the same month, Chinese electric vehicle maker BYD Co Ltd sold Volkswagen-branded cars for the second time in four months. Government plans for stricter auto emissions standards to take effect on July 1 have added pressure on automakers and dealers to clear inventory of vehicles that do not meet the standard, Fitch Ratings analysts said in a client note on Thursday. There is no other way to describe what is happening other than a catastrophic decline in the performance of multinational ICE (internal combustion engine) brands, said Shanghai-based Bill Russo of consultancy Automobility. State-owned newspaper Economic Daily said in a commentary on Friday that the price war is likely to spur consolidation in the fragmented domestic auto industry, which has more than 130 passenger car makers. But it could hurt profitability and innovation and hinder the growth of the overall sector, which is a pillar of the economy, the newspaper said. Local governments are supplementing incentives to revive demand for cars produced by local automakers. Central Hubei province and state-backed Dongfeng Motor Group Co Ltd have offered subsidies of up to 90,000 yuan, or 40% of list prices, for the entry-level Citroen C6 sedan produced by its joint venture with Stellentis NV. ($1 = 6.8923 Chinese yuan renminbi) (Reporting by Zhang Yan and Brenda Goh; Editing by Himani Sarkar and Christopher Cushing)
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