(Yicai) Aug. 28 -- Harmony Auto Holding, a Chinese dealer of luxury vehicles, said that as an emergency measure it will implement across-the-board salary cuts as its losses mount as a result of the severe price competition in the country’s car market.

“Cutting the salary of all employees is a proactive and temporary measure to adapt to the market environment and enhance our ability to withstand future risks,” the Zhengzhou-based company told Yicai yesterday.

Harmony Auto and its units will trim salaries from this month until the end of the year, according to an internal company letter circulating online. The chairman and vice chairman’s renumeration will be halved, while that of the president, vice presidents, and other senior managers will fall by 35 percent. Middle managers and other staff will see cuts of 25 percent and 15 percent, respectively.

Harmony Auto faces unprecedented operational pressures, the letter noted. Once the operational situation improves and the firm returns to profitability, it will immediately reinstall the original salary levels, it added.

The price war raging in China’s auto market, the world's biggest, has resulted in almost 51 percent of dealers reporting losses for the six months ended June 30, up from almost 44 percent a year earlier, according to a new report by the China Automobile Dealers Association.

Harmony Auto told Yicai that the company is “confident that through various initiatives it will be able to conclude this special phase as soon as possible.”

Harmony Auto, which went public in Hong Kong in 2013, operates dealerships for 14 luxury car brands in China, including BMW, Ferrari, and Lexus. According to its annual financial report, Chairman and founder Feng Changge earns CNY2.3 million (USD322,800) a year.

Harmony Auto's sales climbed 8.4 percent to 38,475 units last year from the previous one, but it ended in the red for the second straight year due to falling vehicle prices, the report showed. Its net loss was CNY252 million (USD35.4 million), while revenue rose 1.6 percent to CNY16.6 billion (USD2.3 billion).

Editors: Dou Shicong, Martin Kadiev