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The mid-class vehicle segment, which is becoming the mainstream sector in China, took the lead in price cuts last year compared with the luxury model and mini car sectors.The average auto price in the mid-class sector dropped 7.2 percent last year compared with 5.6 percent reduction for the auto market as a whole, according to a report from Cheshi.com, an independent Website after monitoring over 1,700 mainstream models in the market.

"The mid-class sector has been the most competitive market and its price has been dropping at a fast pace since March," the report said.

Prices in the compact car segment dropped 6.6 percent, the second biggest decline, followed by 5.5 percent in the mid-to-high class sector, the report said.

"China's fast growing economy has made cars more affordable to Chinese customers and the mid-class sector has the biggest potential," said Zhang Boshun, secretary of China Association of Automobile Manufacturers Market and Trade Commission.

Volkswagen AG's Jetta, General Motors Corp's Excelle as well as Hyundai Motor Corp's Elantra now dominate the mid-class car sector with annual sales around 170,000 units.

Car makers used to cut prices to maintain the attractiveness of their old models amid the influx of new models, especially when Chinese first-time buyers have less brand loyalty.

The report predicted auto prices will continue to drop by five percent to seven percent this year, and the mid-class segment will also see the biggest reduction.

However, the mid-to-high class segment will replace the compact car sector as the new battle ground for car makers as affluent Chinese auto buyers begin to upgrade their models.

(For more biz stories, please visit Industry Updates)