BERLIN – Shares in BMW, Daimler and Volkswagen dropped on indications that growth in China's auto market, the world's largest, may be slowing more than previously forecast, leading to an increase in auto discounting.
Total vehicle deliveries -- forecast by the China Association of Automobile Manufacturers to grow 8 percent this year -- may fail to increase by even 5 percent because of the "difficult" economic backdrop, Gu Xianghua, one of two deputies to the secretary general at CAAM, said at a conference in Qingdao on Tuesday.
Demand for commercial automobiles would be hit the hardest, Gu said.
Shares in BMW declined as much as 3.89 euros, or 5.4 percent, to 67.95 euros as of 11:20 CET in Frankfurt trading. Daimler shares fell 5.1 percent to 44.71 euros and VW fell 4.5 percent to 132.90 euros.
Mercedes is offering record discounts of 25 percent on the S-class sedan in China, according to cheshi.com, which tracks prices at more than 3,000 Chinese dealerships.
BMW's 7 series and Audi's A8 sedans now sell for 20 percent below sticker prices, and salesmen are dangling perks ranging from free iPhones to Hermes-bag coupons as waiting lists have vanished.
China is VW's biggest market, while it's the third-largest for BMW and Mercedes.
"The rebates are an indication of weaker demand" in China, said Daniel Schwarz, a Frankfurt-based analyst with Commerzbank. "It's certainly a negative" for the German carmakers, said Schwarz, who estimates that China accounts for about 30 percent of profit at BMW and VW and roughly 20 percent at Daimler.
Gu's comments reflect the mounting pessimism over sales in China as the economy slows and rising fuel prices threaten to drive away consumers from dealerships.