Evergrande 'selling car below costs'

China Evergrande (3333) is reportedly selling its first electric vehicle below cost price to boost sales, a state-owned newspaper under the People's Daily said.

China Evergrande New Energy Vehicle (0708) started taking pre-orders for the Hengchi 5 ealier this month, with the starting price of the vehicle at 179,000 yuan (HK$209,210) after the state subsidy.

The sales of Hengchi 5 is crucial to the direction of Evergrande's car-making business and the price of 179,000 yuan may only be temporary to boost the sales, an unnamed staff from Evergrande's EV unit was quoted as saying by the International Finance News.

Deliveries are expected to start as soon as October and reach 10,000 units by the end of March, the company had said earlier.

Evergrande's EV unit will build a sales network of 200 outlets by the end of this year, comprising both direct-sales stores and authorized dealers. Customers who put down a 1,000 yuan refundable deposit and 10,000 yuan upfront as of August 1 can pay the remaining balance at delivery and are allowed to return the car for refunds within 15 days after delivery. The company also promised to buy back the car at up to 60 percent its original price in three years.

At its peak, China Evergrande New Energy Vehicle was valued more than Ford Motor before being caught up in the debt crisis engulfing its parent company Evergrande. The stock plunged by more than 95 percent and trading in Hong Kong has been suspended since April 1.

Meanwhile, Evergrande defaulted in December and aims to provide creditors with a preliminary overhaul proposal by the end of July.