Car prices in China may drop more than five percent this year due to a possible market oversupply and more severe competition, according to the National Development and Reform Commission.

The price drop will be slightly larger than last year's 4.86 percent as production rapidly expands in the world's second-largest auto market, according to the latest survey from the NDRC's price-monitoring department.

The growing production capacity is partly as a result of a series of mergers and acquisitions that help car makers to consolidate assets, according to the survey.

Domestic auto manufacturers also sped up their efforts to seek listings on the stock market, helping the expansion, the survey said.

A stronger yuan will enable joint ventures to enjoy lower costs on imported spare parts and balance the rising cost for raw materials in China.

More than 80 new models will be unveiled on the domestic market this year, including updated versions.

Nearly all market segments will see cheaper cars this year. However, growth in auto sales may slow this year because of record high oil prices since the second half of last year.

China's vehicle sales are forecast to rise 13 percent to hit 10 million units this year, compared with a 22-percent rise last year from 2006.

Meanwhile, China's auto exports jumped 78.9 percent to a record of 612,700 units last year, fueled by stronger demand for China's own-brand vehicles, according to China's Association of Automobile Manufacturers.

Total export value amounted to US$7.3 billion, with a year-on-year increase of 130 percent.

Wuhu-based Chery Automobile Co Ltd exported the most among domestic car makers, followed by Geely Automobile Holdings Ltd, Brilliance China Automotive Holdings Ltd, Hafei Automobile Group and Chang'an Automotive Group.

Auto imports rose 37 percent to 314,200 units last year from 2006, said the auto manufacturers' association.

(Shanghai Daily February 13, 2008)