The price of new cars in China continues to drop and by 2020, it’s expected that it would have decreased by 20% compared to current levels, according to Volkswagen AG's former China CEO Winfried Vahland.
The most crucial factors for the pricing decline in China include intense competition, low disposable income, and relatively low production costs.
Vahland explained that since the quality of Western cars is higher, they’re justified to sell at higher prices. But as Chinese brands are fast catching up with offering better quality, Vahland said that they’re not expected to sell at low prices and that the “price pressure won't lessen."
Vahland made these comments last Nov. 2 at the Automobilwoche industry conference in Berlin. Automobilwoche is a sister publication of Automotive News China. The cheapest cars in China are priced at about 3,000 euros, and the average price is nearly 10,000 euros.
But in Europe, cars are priced at an average of 16,000 euros. Before Vahland was named as CEO of Volkswagen's Skoda brand on Sept. 1, he spent five years as head of VW's China operations.
According to industry watchers, VW's board was glad upon seeing Vahland succeed in reversing VW's losses and narrowing market share in China. Insiders claim further that this Skoda appointment is tantamount to Vahland being considered as a potential successor to VW CEO Martin Winterkorn. [via autonews - sub. required]