According to China's WTO obligations, the country will slash customs duties on imported autos to 25 percent by 2006, a move expected to drive future sales of foreign cars on the mainland.

With automakers, both domestic and foreign, cutting prices to expand market share, many of the world's top car makers are also rushing into the expansion of previously small sales and after-sales service networks.

Aside from some of the market's older established players, including Shanghai GM, FAW and Dongfeng-Citroen, most foreign manufacturers have had to play catch-up with their domestic competitors.

Guangzhou Honda Auto Company Ltd plans to increase the number of its specially-authorized dealers from 120 to 160 by the end of this year and to 240 by the end of 2003.

Nanjing Fiat, a car joint venture between Nanjing Yuejin Automobile Group and Italian automaker Fiat, eyes similar expansion. It will add another 25 dealers to its 20-dealer sales network by the end of this year and increase the total number to 65 by the end of 2003.

Meanwhile, two newly-launched car joint ventures, Tianjin Toyota Motor Co Ltd and Chang'an Ford Motor Co Ltd, are enrolling dealers for their own yet-to-be-built sales networks.

Sweden's Volvo Car Corporation, which boasts 22 franchised stores and 15 after-sale service stations around China, has set up two large-scale sales and after-sales service centers in Beijing and Shenzhen. Another large exhibition center will soon be completed in Shanghai. The company has even extended its reach into some of China's smaller cities.

Automakers prefer share-holding firms, rather than State-owned enterprises, when they look for potential authorized dealers for their more flexible management, the report said.

(China Daily April 02, 2002)