Chery suffers 8.7pc decline in car sales

PUBLISHED : Tuesday, 30 December, 2008, 12:00am
UPDATED : Tuesday, 30 December, 2008, 12:00am

Chery Automobile is expected to fall short of its yearly target after sales in the first 11 months dropped 8.7 per cent from last year, hurt by slow domestic and global demand.

The Anhui-based carmaker, ranked fourth in the country, sold 323,612 vehicles in the period. Earlier this year, it had set a target of 480,000 units.

'Chery has had difficulty maintaining good net profit over the past years,' said a source.

'This is understandable because its main business is to produce and sell small, inexpensive economy cars.'

The average selling price for local-brand small vehicles ranges from 30,000 yuan (HK$33,900) to 50,000 yuan. Makers of small cars have to further reduce prices to lure customers in the slumping market.

Chery, which makes the QQ, may have to delay its plan to list on the mainland stock market owing to its unimpressive track record of profitability.

The mainland has reported low sales growth for small cars over the past two years. The China Association of Automobile Manufacturers has not yet released official sales figure for small cars in the first 11 months.

Chery sold 380,000 vehicles last year, up 24.8 per cent from 2006. Exports took 31.53 per cent of total sales. A China Business News report said overseas sales by Chery fell this year because of the weak Russian market, which is a major destination for mainland vehicle exports.

It said the company's sales in Russia had stopped since September as the country suffered the effects of the global financial crisis.

Chery also has had to place a hold on exports to the United States by calling off its co-operation deal with Chrysler.

But the company said earlier this month the Export-Import Bank of China had agreed to a 10 billion yuan loan to support its export business.

Mainland sports utility vehicle maker Great Wall Motor said earlier it had abandoned its plan to build a plant in Russia because of mounting protectionism in the vehicle industry.