BEIJING (Reuters) – China’s top pickup truck maker Great Wall Motor <601633.SS> is not willing to enter a price war as sales slow down because of the coronavirus epidemic, but will keep trying to develop overseas markets, its chairman said.
“Great Wall does not want to enter a price war in the market slowdown because price represents brand value,” Wei Jianjun, chairman of Great Wall, which is also one of the biggest sports-utility vehicle makers in China, told a conference.
“Blindly occupying the market with price cuts will hurt the brand, especially when automakers’ cash flow cannot be fully guaranteed,” Wei said, according to a transcription provided by Great Wall.
“We are now adjusting the production cycle and slowing it down. If production causes a large backlog of products, it will not be good for the entire operation.”
Great Wall was among the first major automakers to cut car prices in late 2018, when China’s car market, the world’s biggest, started to drop. However, since 2019, Great Wall started to dial back the aggressive price strategy to regain profit.
The Baoding-based automaker, which is also building a car plant with BMW <BMWG.DE> in China’s eastern province of Jiangsu, has cut its sales target by 8% to 1.02 million units and profit target by 13.8% to 4.05 billion yuan for this year.
Rival state-owned automaker GAC <601238.SS>, which has joint ventures with Toyota <7203.T> and Honda <7267.T>, also lowered it sales target from a 8% growth to 3%.
Great Wall sold 1.06 million cars last year. In February, in the midst of the coronavirus outbreak, it sold 10,023 units, down 85.5% from a year earlier, while the overall market dropped 79%.
An official at China Association of Automobile Manufacturers (CAAM) told Reuters that if the outbreak in China is effectively contained before April, the decline could shrink to around 5% for the whole year.
Great Wall agreed to buy two plants in India and Thailand from General Motors <GM.N> earlier this year as the Detroit automaker retreats from unprofitable markets.
Wei said Great Wall considered entering Indian and Thai markets around seven years ago but did not progress as the firm was not ready. Great Wall now expects transactions of both plants to be completed in the second half of 2020 and will revamp their production line to make its own models.
(Reporting by Yilei Sun and Brenda Goh; Editing by Raju Gopalakrishnan)