economy – Volkswagen cuts parts’ prices


I’m just updating the automotive part of the German translation of my Dutch book on “15 misunderstandings about China and the Chinese” and had to grin when I saw this dispatch by Xinhua today. In an effort to halt the fast erosion of its market share of sedans in China Shanghai Volkswagen has announced price reduction on the parts of its Passat and Polo, varying between 25 and 80 percent.
Now the question is who is going to pay the difference of this desperate action to help Shanghai Volkswagen to attract more customers? My guess is that Volkswagen has talked to the suppliers of their parts. They are going to suffer.
Shanghai Volkswagen has of course another problem. At this stage most of the private buyers (and probably also more government departments) belong to the more wealthy section of the Chinese populations. They have often too much money and very little ways to invest it now the real estate market is difficult, the stock markets keep on going down and investing it abroad is only possible after taking the capital out in a suitcase. Volkswagen is associated with the old planned economy and that is something the current buyers want to avoid.