A new report says that China's auto prices will continue to drop sharply in 2005.

The report was released by the Price Information Center of the State Development and Reform Commission.

It says auto production will grow by 15 per cent, 10 per cent above demand.

Price hike in steel, rubber and raw materials may cause fluctuations in the short term. But continued improvement in China's macroeconomy will keep auto prices declining.

As the profitability is high in China's auto industry, there are still spaces for further drops.

But demand will remain steady after nearly two years of blowout.

This will cause excessive supply, and market competition will become fiercer as prices fall further.

Source: CRI News