Dongfeng Motor cuts '09 sales growth target

Dongfeng Motor Corp, the parent of Dongfeng Motor Group, has drastically lowered its sales growth target for 2009 to 6 percent compared with the achieved growth rate of 16 percent in 2008.

China's third-largest automaker is expecting to sell 1.4 million vehicles in 2009, said Xu Ping, general manager, Dongfeng Motor, in the official Shanghai Securities News. It sold 1.3 million units in 2008.

Japanese automakers Honda Motor, Nissan Motor and French carmarker PSA Peugeot-Citroen are major partners of Dongfeng, which does not have self-developed car models, but relies on foreign brands to attract customers. The company outsold General Motors in China, thanks to the introduction of various new models by its Japanese partners.

Unit sales of vehicles in China, the world's second-largest market after the US, totaled 9.38 million last year, just short of the earlier target of 10 million. The single-digit growth was the lowest in 10 years.

To attract car buyers back into showrooms, the government announced last week a 15 billion yuan package that included halving the auto purchase tax for cars with engine sizes below 1.6 liters.

Despite government efforts to stem the decline, analysts warned that the measures have failed to address the core problem.

"The measures are weaker than our expectations in terms of both scope and scale," Kate Zhu, analyst, Morgan Stanley, said in a report. "Although we agree this plan can partially offset declining demand, it will be difficult to completely reverse market sentiment."

Some smaller Chinese automakers, however, have set more aggressive growth targets for 2009, banking in part on policy support to boost demand for pick-up trucks and small cars.

Great Wall Motor Co and Geely Automobile Holdings Ltd, which make mostly pick-up trucks and compact cars, are expecting a nearly 70 percent jump in sales this year.