Beijing Jeep, in which DaimlerChrysler holds a 42 per cent share, will launch a cut-price vehicle in the second half of this year to gain a bigger share of a highly competitive market. Andy Okab, vice-president of the joint venture, said the sales target this year was 35,000 vehicles, including 15,000 Cherokees and 20,000 2020 military-style jeeps, up from actual sales last year of 30,000, including 10,000 Cherokees, and down from 50,000 in 1997. The lowest price for the Cherokee jeep is 128,000 yuan (about HK$119,040). Mr Okab said research had shown there was demand for this vehicle without some luxury features, so it planned to launch at the end of the third quarter a model priced at less than 100,000 yuan. The mainland car market is very competitive, with national output last year of 1.6 million vehicles, the same as in 1997, and 48 per cent of the 123 plants losing money. Manufacturers have overcapacity and are cutting prices. The market focus is changing from official to individual buyers, with the government banning civil servants below the rank of vice-minister from having an official car as from January 1 this year. Mr Okab said that last year the company cut its workforce from 7,100 to 4,800, through early retirement, lay-offs and by moving staff from permanent to a contract basis, and reduced its bank loans by 25 per cent and inventory from more than 800 million yuan to 350 million yuan. 'We were below break-even last year,' he said. In August, the government announced that strict emission controls for Beijing city, due to be introduced in the next two years, would take effect from January 1 this year. 'Luckily for us, Chrysler had the technology,' Mr Okab said. 'If not, we would be out of business in Beijing.' Many mainland manufacturers have not been able to introduce catalytic converters and the other necessary anti-pollution measures in time and cannot sell their vehicles in Beijing. Following Chrysler's merger with Daimler-Benz, Beijing Jeep is undergoing an evaluation by the new company. 'No one in his right mind can recommend packing up and leaving,' Mr Okab said. 'So much has changed in the past five years and so much could change in the next five years.' Official policy towards car-buying is contradictory. On the one hand, banks offer loans to individuals to buy cars, described by government leaders, as, along with homes, the engine of growth. But taxes and fees imposed by central and local governments make prices among the highest in the world, with the cheapest Charade, a small passenger car, costing about US$8,500 in Beijing. Mr Okab said: 'Sooner or later, the government will see that cars are a dynamo for the whole economy, providing jobs in many sectors, such as gas stations, vacation hotels, entertainment centres and sports, when people drive their cars out of the cities for the weekends.'