General Motors Company (NYSE:GM) has resulted to price cuts for over 40 of its vehicle models sold in the Chinese market.
China’s economy has slowed for quite some time now and it is evident that most companies are feeling the effect. General motors being one of them has resulted to reducing the price tags on most of its vehicles in an effort to maintain deliverables. The automobile company reported drastically decreased sales within the first quarter, thus bringing worry to the company as China is one of its biggest market.
The company has resulted in evaluation of its strategy in an attempt to rectify the odd numbers. One of the strategies was cutting the ties with dealers and introducing direct retail. The company has tried out a few other strategies before finally landing on the decision to trim the price tags.
GM made the recent announcement together with its partner, Saic Motors. They announced their decision to cut costs by as much as 53,900 yuan which is equivalent to $8,700 for 40 of their vehicle models. The different models affected span across GM’s Chevrolet, Buick and Cadillac as reported on the company’s website.
The prolific automobile is among the many companies foreign to the Chinese market that have been affected by the slow economic growth in the country. The foreign firms have been under constant pressure as they lose out to local manufacturers. This is because most of the vehicle buyers have been opting for the cheaper options provided by the country’s local car makers.
As a result of the pressure, GM has decided to subdue to cheaper prices in an attempt to get back its sales appeal. Unfortunately the local firms have been playing dirty. They have taken more advantage of the situation by introducing attractive incentives such as cheaper insurance and financing without any interests. This has tightened their hold on vehicle buyers making it increasingly difficult for foreign companies.
Companies like General Motors Company (NYSE:GM) have to be careful in their comeback strategies. For now price cuts will have to hold up the situation.
