The Tianjin FAW Xiali Automobile Co Sunday cut the prices of three of its models by up to 10,000 yuan (US$1,200).

The three models are the Vizi, Echo and Xiali 2000, said the company, a subsidiary of the First Automotive Works Corp, China's biggest carmaker.

The price cut is the second made by Tianjin FAW Xiali in 10 days.

On May 23, the firm slashed the prices of its old Xiali cars by as much as 5,700 yuan (US$689).

The company's cars retail for between 36,800 yuan (US$4,450) and 119,800 yuan (US$14,490).

The company's price cuts are understood to aim to boost sales and profits amid mounting competition in the Chinese economy-car sector.

In a statement released on Saturday, the company's board of management said: "The latest price cut will help us expand our market share and speed up the restructuring of our product mix.

"It will not affect our financial results for the whole of this year."

Tianjin FAW Xiali is listed on the Shenzhen stock market.

Last week, the company launched two new models - the Shengya and Junya - priced at between 47,800 yuan (US$5,800) and 57,800 yuan (US$6,990).

The company sold 36,000 cars during the first four months of this year, an increase of 11.1 per cent over the same period last year.

The company's profits surged by 277.1 per cent year-on-year to 55.6 million yuan (US$6.72 million) during the first quarter of this year.

Analysts said the price cuts are also part of the company's efforts at a revival after last June's merger.

Last June, FAW - based in Northeast China's Jilin Province - acquired a 50.98 per cent stake in what was then the Tianjin Xiali Automobile Co, representing the largest shake-up so far in China's car industry.

The Tianjin company had been losing money over the previous few years because of a sales slump, poor management and price cuts.

The firm posted a loss of nearly 800 million yuan (US$96.73 million) last year.

In January 2002, the company cut the car price by as much as 30,000 yuan (US$3,627), sparking off a price war in the Chinese car market after the nation joined the World Trade Organization the previous month.

Many carmakers based in China have recently cut their prices to cash in on the fast-growing car market, including the Geely Group (one of Tianjin FAW Xiali's biggest competitors), Dongfeng Peugeot Citroen, China Brilliance Auto and Shanghai General Motors.

Sales of Chinese-made passenger cars stood at 539,000 units between January and April this year, up 88.2 per cent from a year earlier.

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