Engine makers mull price rise

"Soaring raw material prices are pressuring engine makers, and most of them are mulling price raises," said Liu Tiezhuang, deputy general-manager of Dalian Diesel Engine Sales Co Ltd owned by FAW Jiefang Truck Co Ltd.

"We may raise product prices between 10 and 15 percent. Steel comprises 98 percent of an engine. Skyrocketing iron ore prices will undoubtedly affect engine makers' purchasing costs," echoed Wu Changhong, deputy sales manager of Shanghai Diesel Engine Co Ltd.

"At least a 10 percent rise in engine prices could offset engine makers' rising costs," believes Jia Guiqi, chief designer for Dongfeng Chaoyang Diesel Engine Co Ltd. "We are exchanging opinions with auto factories, who are under great price pressure, and hope to reach common ground with them, but not until now," Jia added.

Yuchai is distinct from average engine makers confronted with the raw materials price hike. Early in 2007, the engine maker had set up an independent budget department in an effort to control costs from inside and strengthen internal supervision. "We are able to digest current cost rises," said a Yuchai insider with confidence. "However, Yuchai may follow the market tide and change its prices."

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