The Chinese car making joint venture of Denway Motors and Honda Motor reportedly said on Wednesday sales fell 19% in October from September as many consumers were away for week-long national holidays.
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“It is a seasonal factor, similar to other months which have holidays,” a company official, who declined to be identified, told Reuters, adding: “We also produced fewer cars in October because of the holiday.”
The joint venture sold 16,923 units in October, down from 20,962 units in September but up 73% from October last year, Guangzhou Honda Automotive Co. Ltd. Reportedly said on its web site. For the first 10 months of 2004, unit sales rose 72.7% to 154,829 versus the same period last year, while sales revenue rose 37% to 25.44 billion yuan ($US3.07 billion).
According to the news agency, analysts agreed that the sales decline was mainly due to the seasonal Golden Week holiday from October 1 when many would-be customers were on holiday.
“It’s normal to see a drop in sales when there is a holiday,” Phoebe Wong, China auto stock analyst at Nomura Securities, told Reuters. “However, price competition is still a concern among auto makers in China.”
Reuters noted that China’s car market is expected to grow by 10-20% this year after nearly doubling last year to two million units, but some industry watchers have warned of a looming glut as more domestic and foreign players announce major capacity expansions.
The report said that Honda, however, is running at full capacity in China, thanks to strong demand for its popular Accord sedans and Odyssey minivans. Guangzhou Honda, which is 47.5% held by Denway, reportedly said 17,254 units were produced in October, bringing total production to 158,409 units for January-October, up 72% from the same period a year ago.
The company said the construction of a second manufacturing plant in Guangzhou would further boost its competitiveness, Reuters added. Its major shareholder, Honda Motor Co., said on Tuesday it would build a second auto plant in China’s southern province of Guangzhou – the new plant and other expansion plans will nearly double its production capacity in China by 2006.
