Beijing will ban the sale of new cars failing to meet the China IV emission standards, which are equivalent to that of Euro IV, starting from March 1 this year, triggering price fluctuation of new cars in the capital, the Beijing Business Today reported.

The price wars, which will mean greater price reductions in the automobile market, surprised consumers with experts attributing the discounts to the implementation of the new emission standards.

According to an insider of Beijing's Yayuncun (Asian Games Village) auto market, one of the capital's biggest auto markets, some vehicle models are temporarily out of stock due to supply factors, but the shortage won't last long.

In addition, auto manufacturers had known of the standards for a long time and had measures in place to meet the standards, resulting in the postponement of price reduction waves.

Most vehicle distributors even cancelled price reductions on the grounds of the China IV emission standards, which means more cost on technical improvements resulting in an increase for the average price of new models. But many new models, including the new Corolla, the Focus and the Octavia, haven't raised their guide prices.

Insiders said the market will see more price reductions after March 1.

According to information from Yayuncun auto market, the Mazda 5, a hot-selling sedan, is now available without spending additional money. The Chery A1, the indigenous brand Chery's first mini-sized car complying with the China IV standards, is selling at 1,500 yuan ($209.8) less.

The latest survey from the National Development and Reform Commission's price monitoring center indicates that China's automobile prices will continue to drop this year as a result of oversupply and fiercer competition.

The price drop will be five percent, slightly larger than last year's 4.86 percent as production rapidly expands in the world's second-largest auto market, the survey suggests.

The growing production capacity is partly a result of a series of mergers and acquisitions that help carmakers to consolidate assets, according to the survey. Domestic auto manufacturers also sped up their efforts to seek stock listings, helping the expansion, the survey said.

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

(Chinadaily.com.cn February 20, 2008)