Jardine International Motor Holdings, the international motor trading arm of Jardine Matheson, says sales of Mercedes-Benz cars in Hong Kong surged 30 per cent this year but are being held back by a supply shortage. Speaking at the company's annual meeting yesterday, chairman Anthony Nightingale said Mercedes-Benz sales by its Hong Kong subsidiary, Zung Fu, would have improved further had not demand for the luxury cars in Europe and the US outstripped supply. 'The unit sales have been reasonably good in the first half of this year. We could sell more, but there is a worldwide shortage.' Mr Nightingale did not know when the shortage would end. The lack of supply had meant the group's sales in Hong Kong, famous for having the world's highest number of Mercedes-Benz per capita, had lagged behind the rest of the market in its recovery from depressed sales in 1996. Over the first five months of the year, total car sales in Hong Kong rose 68 per cent, while sales of luxury cars increased 45 per cent. Mr Nightingale said he stood by his cautious forecast for the company's results this year, because, despite the increased sales, a change in model mix had reduced margins and led to a lower contribution. He said the group's operating margins were being lowered as more buyers were choosing the lower-end Mercedes-Benz C-class rather than the luxury S-class. Mr Nightingale said the group's results elsewhere in the world were mixed, because strong performance in the company's British operations had been offset by continuing difficulties in France. Finance director Sam Houston said the group's final results this year would be helped by the booking of US$12.3 million from the sale of a property in Repulse Bay. The company's net profit fell 35 per cent last year.