Chinese Domestic Carmakers Face Price War

Price cuts among foreign carmakers in China will soon spread to a similar discounting war among the country's domestic producers, warns the head of the Chinese Assn. of Automobile Manufacturers.

Secretary General Dong Yang says carmakers should stop adding capacity and focus on combining operations instead, Bloomberg News reports.

Growth in demand for passenger vehicles has eased in China. Analysts say a big reason is the country's surging stock market, which has been diverting consumer spending away from cars. The sales slowdown has prompted foreign brands to cut prices by as much as 30%.

But Dong predicts sustained low growth rates won't become the norm until car ownership in China, currently at 150 million units, reaches 400 million vehicles.