Such a sharp drop will bring pressure to bear on the automobile industry in two ways. With no capability to develop complete vehicles, it is hard for the Chinese automobile industry to compete with foreign companies. The second is price depreciation. The pressure from price reductions is mainly felt by those whose prices are higher than the world market prices, such as cars, luxury buses and trucks. The direct and the most effective means for foreign automobile manufactures to enter a new market is to cut price and cost.
Low price can win loyalty from customers and help enterprises achieve a bigger market share.
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