UPDATE 1-Honda July China sales fall, expects Q2 rebound after new launches

Mon Aug 4, 2014 6:55am EDT

(Adds company comment, analyst quote)

By Samuel Shen and Norihiko Shirouzu

SHANGHAI Aug 4 (Reuters) - Honda Motor Co Ltd posted a 23 percent slump in July China vehicle sales, its biggest decline in 17 months, casting doubts over the company's full-year sales target in the world's biggest auto market.

Honda had said it aims to increase China sales by 18.9 percent this year, but during the first seven months, sales only grew 6.9 percent.

A Honda spokeswoman attributed the decline to tough competition, and a seasonal decline in demand, among other factors, but said sales were expected to rebound in the second half of the year after the company launched new models.

Honda is expected to launch around September a small utility vehicle and a cross-over utility version of the Honda Fit, to take advantage of these vehicles' popularity in China.

Rival automaker Toyota Motor Corp also saw China sales fall 1.1 percent in July and 7.6 percent from a year earlier. Toyota sales have been weak because it is still ramping up production of the newly redesigned Corolla model, which went on sale in China recently, company officials said.

Honda and its two local joint ventures sold 39,543 automobiles in China in July, down 22.7 percent from the same month a year ago and also lower than the 15.8 percent year-on-year increase in June

The July decline is the biggest monthly fall since February 2013, when Japanese carmakers were still suffering from a wave of anti-Japanese sentiment in China triggered by a territorial dispute between Beijing and Tokyo.

Honda's China sales in the first seven months of the year came to 392,959 vehicles, up 6.9 percent from the same period a year earlier.

Honda, which operates car ventures in China with Dongfeng Motor Group Co Ltd and Guangzhou Automobile Group Co Ltd , has said it aims to sell 900,000 cars in China this year.

The automaker will double the number of car models it sells in China over the next two years to increase its market share, Japan's Nikkei newspaper reported in May. (Additional reporting by Brenda Goh; Editing by Miral Fahmy)