Volkswagen’s two car-making ventures in China sold almost 19% fewer vehicles in August compared with July, as a sales boost triggered by earlier price cuts wore off in a weak market, Reuters reported.

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The news agency noted that growth in sedan sales in China has decelerated since April when the Beijing government slapped curbs on credit, afraid that over-investment in pockets of the economy could generate more bad loans.


Volkswagen, China’s top foreign car maker with about a quarter of the market, saw sales drop 18.6% to about 40,900 units in August from July, a company source told Reuters, citing preliminary figures.


“It’s really not that strange,” CSM analyst Yale Zhang told the news agency. “They cut prices in June, which had a very obvious effect in July. There’s nothing surprising about a fall in August. September is traditionally a busier month for sales anyway.”


Brokers told Reuters speculation of a weak August depressed Volkswagen’s Frankfurt-listed shares, coming after already poor US vehicle sales.

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“The declining sales in China are much worse. This market is as important to VW as Germany,” analyst Albrecht Denninghoff at HVB said. “If the China performance worsens, that is a significant drag on the entire group.”


Reuters noted that Volkswagen’s China sales in July accelerated almost 53% from June, after prices were slashed by up to 11.7%, following a similar move by arch-rival General Motors. But its main venture in Shanghai posted a sales slip of about 20% to 20,600 cars last month, the source reportedly said, down from 28,060 in July. VW’s venture with First Automotive Works in the northeastern city of Changchun sold about 20,300 cars in August, a drop from 22,155 cars in July, the source added.