cars - Waiting for the next price drop

Not only new government policies, but also consumers that wait for the next price drop, explain the ongoing drop in car sales, writes state newsagency Xinhua.
Car makers like German Volkswagen and US GM could make enormous profits on the relatively low number of sales in the past because of the high margin they got. Thanks to goverment protection, the profit per car used to be over 20 percent. That high margin started to tumble as after China's accession into the World Trade Organization (WTO) in December 2001, consumers refused to buy cars, anticipating lower car prices. The manufacturers first did not move, but a few months into 2002 a dramatic fall in car prices sparked off a buying craze. That higher turnover made up for the first drop in prices.
Now the growth has dropped from 50 percent, year-on-year to less then 20 percent last month. When the assesment of the consumers is right, the car industry might face a second tug war with their potential customers, that will end in lower prices and lower profitability.