THE cheap and cheerful Chery J1 has had its price dropped by $2000 to $9990 drive-away.
The Chery J1 is the cheapest new car in Australia since 1993, when the Polish-built FSM Niki sold for $6990 plus on-road and dealer costs.
While various car makers in the past 20 years have sold cars close to $10,000, none have fallen below the barrier, typically settling at $10,990 or $11,990.
The push to price the largely unknown Chery below $10,000 is sure to boost sales.
A spokesman for Chery importer Ateco Automotive, Daniel Cotterill, told Drive that the new pricing for the J1 is "not a special offer".
"Chery so far hasn't flown the way we, or Chery, would have liked it to. But there's great determination both with Chery and with Ateco Automotive to make sure that Chery does gain a foothold it needs in this country, and [this new price] is part of the strategy to get it done," Cotterill says.
"Since we've been in the Chinese car business we've sought to use currency fluctuations and exchange rates to their best effect to make our products as competitive as they can be. And as the currency has worked for us, we've passed that on to the customer.
"We're casting around looking for a way to make [the Chery business] work in Australia," he says.
"If an offer like this breathes life into the franchise then of course people will be more willing to sell the product. We've had a very loyal and very tough crew of Chery dealers who have stuck with us through the launch phase."
Cotterill says increased competition from cars like the new Thai-built Mitsubishi Mirage, which is currently being advertised at $12,990 drive-away, has led to Chery taking this aggressive tack.
"This is not a special offer. There's no fine print. That's the price, and that's what you get," Cotterill says.
However, the Chery is lacking key safety features, including potentially life-saving side airbags and stability control, which can help control a skid and has been credited with reducing single-vehicle crashes by up to 40 per cent.
The J1 undercuts similarly-sized city hatchbacks by about $5000, and it is $2000 cheaper than the rival Suzuki Alto, which comes with four more airbags and stability control.
Chery's J1 hatchback scored just three stars in its ANCAP crash test.
The Chery J1 scored just three stars in its ANCAP crash test in 2011, well below the standards of cars priced around the $14,000 mark.
Chery has also cut the price of the J3 small hatchback to a new low - it's priced at $12,990 drive-away. That car will finally receive stability control as standard from the second quarter of 2013. That will allow Chery to sell the J3 in Victoria, where it is currently illegal to sell cars without the potentially life-saving technology.
Cotterill says it is not yet clear whether the J1 city car will be offered with stability control, something that means it can't be sold in Victoria.
Despite the huge popularity of SUVs in Australia over the past 12 months, Chery's own soft-roader, the J11, has struggled despite an aggressive pricing strategy. It remains priced at $17,990 drive-away for the manual and $19,990 drive-away for the auto.
"That's as good as we can do with that price at the moment," says Cotterill.
The move from Chery to lower the price of its brand new city car to below $10,000 is also likely to impact the lower end of the used car market.