pSHANGHAI, Jan 5: General Motors Corp. has cut prices on two of its China-made models by up

SHANGHAI, Jan 5: General Motors Corp. has cut prices on two of its China-made models by up to 10 percent to push sales, a move that could force similar cuts by rivals in the world's second largest auto market.

''Auto makers here tend to slash prices at the beginning of the year to attract buyers,'' said Xie Shuguang, senior analyst with Shanghai Securities. ''Now that Shanghai GM has taken the lead, more will follow soon.'' Shanghai GM, the auto giant's flagship venture with Shanghai Automotive Co., said on Friday that it had reduced prices of its Chevrolet Lova and Aveo economy cars by as much as 9,900 yuan ($1,268) starting this year.

The venture shipped 413,367 cars in China last year, up from 325,429 in 2005. At the start of last year, it cut Chinese prices on its medium-to-higher-end Regal and Espica models by as much as 10 percent.

Shanghai GM did not disclose its full-year earnings or explain how the price cuts would affect margins. But a source close to the company told Reuters late last year that the venture was likely to book between 4.5 billion and 5 billion yuan of net profit for 2006, and earnings for 2007 would be no less.

Although China's auto market is continuing to grow strongly, boosting sales at most car makers, price competition has become tough as companies ramp up production capacity.

GM, which competes with other multinationals including Volkswagen A.G. in China, sold 665,390 vehicles of various types in the country in 2005.

Kevin Wale, president and managing director of GM China, told Reuters in November that his company would sell up to 35 percent more vehicles in China in 2006, while sales would grow more than 15 percent in 2007.

($1=7.809 Yuan)

REUTERS