Despite a sharp cut in prices of Japanese cars during the festive season and a drop in the value of the yen, Japanese car sales in the SAR have failed to pick up. Total car sales in Hong Kong have dropped by more than 11 per cent to 4,344 for October and November this year from the same period last year, according to Helen Chau, marketing manager at Reliance Motor. 'This year, car sales have dropped more than 10 per cent across the board, especially for the middle-range cars costing from HK$200,000 to HK$300,000,' said Ms Chau. Total car sales were expected to slide further by another 5 per cent for this month, said Ms Chau, despite it being peak time for sales. People usually buy cars at this time of year, but because of poor economic conditions they were holding back purchases to wait for more discounts, she said. Car prices have been forced down by between 8 per cent to 15 per cent since the September 11 terrorist attacks. Dealers also usually cut the price of cars at this time of year to clear stocks. Paul Law, chairman of Olympic Motors Group, said profit margins had narrowed since October and sales had dipped for both new and used cars. 'We did not expect [the September 11 attacks], but dealers have stocked up the cars for this year, so we have to sell cheap,' he said. However, dealers were not expected to drop the prices further, said Ms Chau as 'they are already very cheap' and the weakening yen would not instil further price cuts. Keen competition from European cars was also another factor driving down the price of Japanese cars in the SAR and more consumers were turning to European cars, said Ms Chau. 'European cars are continuing to lower prices as they were comparatively expensive [to Japanese cars] in the past.' The phenomenon was evident especially last year when car sales for Audi and Volkswagen increased by 30 per cent and 80 per cent respectively. According to Ms Chau, European car sales increased 4 per cent, while Japanese car sales dropped 18 per cent, this month and last month from the same period last year.