VW: 'Worst may be yet to come' for China car market

Oct. 31 (Bloomberg) -- Volkswagen AG, the biggest overseas carmaker in China, said the "worst may be yet to come" for the country's auto market after industrywide sales dropped for the first time in three years.

"We are adjusting our production to respond to falling demand," Executive Vice President Soh Weiming said in an interview yesterday in Beijing. He didn't elaborate.

China's car sales declined in August and September as the Beijing Olympics, a cooling economy and a stock market slump damped demand. The slowdown and increasing competition may hurt earnings at Volkswagen, General Motors Corp. and Toyota Motor Corp., which are all counting on emerging markets to offset declining sales in the U.S. and Europe.

Volkswagen's sales in China, its biggest overseas market, tumbled 4.2 percent in the third-quarter. Sales in the first half surged 23 percent. The Wolfsburg, Germany-based carmaker yesterday reported a 27 percent rise in third-quarter net income because of sales in emerging markets.

SAIC Motor Corp., China's biggest automaker, earlier this week reported a 78 percent plunge in third-quarter profit. The company, which makes cars with both Volkswagen and GM, said its vehicles sales growth slowed to 9 percent in the first nine months from 24 percent a year earlier.

"It is too early to estimate" the losses caused by the economic slowdown in China's auto industry, Soh said.