Sime Darby Hong Kong, which distributes BMW, Ford and Mitsubishi cars in Hong Kong under licence, has seen sales drop about 40 per cent during the past three months amid the prevailing spending slump, according to managing director John Hickman Bell. The decline mirrored a 41 per cent drop in car registrations in the three months to October 31, he said. However, business probably would stabilise given improved investment sentiment in the stock market and renewed confidence in the Hong Kong dollar, he said. 'It's still a tough time,' he said after the firm's annual general meeting yesterday. 'But there are positive signs for a stabilisation rather than a deterioration.' Despite operating at a profit during the period, margins were squeezed as a result of frequent promotions, Mr Bell said. 'In order to stay in the business, we, like other market players, offer discounts. It's all market driven,' he said. With a 'comfortable' debt and cash level, the company was scouting for acquisition targets. 'We are interested to buy any car-related business that can balance our existing operations,' he said, without elaborating. In July, the company paid Malaysian-based parent Sime Darby $31 million for an insurance company which Mr Bell said complemented its car-trading business. He would not say if the company planned to buy any more assets from the parent in the near and medium term.