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Kandy Wong

The China Association of Automobile Manufacturers may cut its vehicle sales target for this year after Ford Motor slashed the price on its Mondeo  and a slow start in the second half.
The association, supervised by the Ministry of Civil Affairs, will consider revising its target after the release of sales figures for last month.
'September is usually a peak season for vehicle sales. But industry experts have estimated sales may not be that good in the second half,' said senior deputy secretary general Shen Ningwu. 'If sales are not  high,  we might have to adjust the target.'
The association's  target is 10 million units for the year,  up 14 per cent from last year. Mr Shen did not say  how much it might be reduced.
Automotive Resources Asia, a division of JD Power, has cut its forecast on the mainland's vehicle sales growth to 10 per cent from 15 per cent.
'Price reduction will be continuously deployed by carmakers to boost sales in the second half because they don't have many choices,' said Matthew Kong, a vehicle analyst at Fitch Ratings.
Changan Ford said last month it would lower the price of its mid-range Mondeo by as much as 20,000 yuan (HK$22,700). The Mondeo  was originally priced between 169,800 yuan and 223,800 yuan.
The National Development and Reform Commission estimated early this year that the average price of a car  would drop at least 5 per cent by the end of this year. Prices of new vehicles fell about 3 per cent, the country's top planner said.
Mainland passenger car sales shrank last month  for a second consecutive month. Vehicle sales dropped 1.44 per cent  year on year to 552,800 units. That followed  a 6.24 per cent year-on-year decline in August to 451,300 units, according to the China Association of Automobile Manufacturers.
August's drop was the first decline in more than three years as  the Olympic Games and a weaker economy delayed purchases.
Passenger car sales were 6.48 million units in the first eight months, up 13.94 per cent from a year ago but higher petrol prices and a rise  in consumption are slowing growth in recent months.
'If the growth rates still remain at 13 per cent or below in the following months, the market won't attain the 14 to 15 per cent growth to 10 million units by the end of the year,' Mr Kong said.
China International Capital Corp said the vehicle industry was facing 'tough times'.
A-share  carmakers such as SAIC Motor Corp, Changan Automobile and FAW Car will be affected by the declining sales.
The shares of Shanghai-listed SAIC,   the country's largest carmaker, have slumped 78.36 per cent this year while FAW's have  dropped 70.26 per cent.
Credit Suisse also rated  Hong Kong-listed carmakers such as Denway Motor, Dongfeng Motor and Sinotruk (Hong Kong) 'underperform'.
The bank said earnings visibility of the sector continued to deteriorate with increased uncertainty over demand and  higher raw material prices.
Denway, which sells Honda's Accord and Odyssey, has lost 68.66  per cent this year, Brilliance China has fallen 76.15  per cent while Dongfeng Motor has decreased 64.18  per cent.
China, the world's second-biggest car market, was not alone in weakening sales. Selling prices in the United States, the largest market, have dropped 2.3 per cent in the second quarter from a year earlier.
John Bonnell, director of Automotive Resources Asia, said: 'Purchases for September might not be very strong [in China] due to the weakening economy, although sales in September and October should be very telling after the Olympics.'



Mainland car trade group  may cut target as sales slow