Car dealerships in China have been offering large discounts in the past several months as they face the slowest growth in new car sales in four years.
Discounts of at least 30 percent are being offered in major cities on hundreds of models, including brands normally perceived as expensive. Audi's top-of-the-range A8L luxury sedan is now selling for 1.28 million yuan ($200,000), after originally retailing for 1.97 million yuan ($317,000), according to Autohome, a website catering to Chinese automobile consumers.
"Prices are getting lower all the time, even as cars are getting better," said 37-year-old Bill Shen, who works for an auto parts company. "If it's not urgent, one can wait."
Shen, a Shanghai resident, has been planning to upgrade his 8-year-old Citroen to a more upscale brand, but since cars are getting cheaper, he is not in a hurry. Consumers like Shen are proving problematic for China's new vehicle market.
In 2009, China's new vehicle market overtook the U.S. to become the largest in the world. However, the auto industry is now offering unprecedented offers to boost sales after the flagging Chinese economy, stock market volatility and government curbs on car registrations, all of which deter would-be car buyers.
"This round of price cuts is the worst in China's auto industry history in terms of the number of models involved and the depth of the cuts," said Su Hui, deputy division head at the state-backed China Automobile Dealers Association. "Nobody saw it coming, not the government, not the automakers, not the dealers," added the 26-year industry veteran.
According to brokerage Stanford C. Bernstein & Co., automakers and dealers are offering other incentives, aside from discounts, for consumers such as subsidized insurance, interest-free financing, zero downpayments and boosting trade-in prices.
"It is a very good time to buy a car," said Lin Huaibin, an analyst at IHS Automotive based in Shanghai. "Luxury carmakers began to offer bigger and bigger incentives starting from last year and the trickle-down effects are forcing the mass market brands to cut prices as well."