SHANGHAI -- DaimlerChrysler AG posted a 70 percent jump in sales of its Mercedes luxury cars in China in the first half year, defying a slowdown in nationwide car sales that began in April.
But a worsening energy crunch across the country forced the automaker's Beijing Jeep venture to halt production for a few days recently, an executive said on Tuesday, without elaborating.
After years of underinvestment in capacity and rising incomes, China faces an electricity shortage that has triggered emergency conservation measures, especially during peak summer demand.
"We've taken a couple of days off based on the request of the government here in Beijing," spokesman Trevor Hale said. "We can make up the volume, by maybe working a little overtime if we need to. I don't think that's impacted our program."
DaimlerChrsyler joins Volkswagen AG and General Motors in announcing recent output disruptions.
Carmakers are also dealing with slowing industry growth.
Wrapping in sales of SUVs from the Beijing Jeep venture -- China's oldest auto production venture -- DaimlerChrysler sold 22,200 vehicles in China in January through June, a rise of 173 percent or more than double the same 2003 period.
But the Stuttgart company expects sales of its vehicles in China to grow just 75 percent over the full year, it said in a statement, without offering any comparison.
China's hot auto sector has been targeted by Beijing, which fears that automakers are adding too much capacity, helping boost raw materials prices and fomenting an industry downturn.
Still, DaimlerChrsyler, which hopes to sell 50,000 Mercedes cars annually in China in five to 10 years, said the luxury car segment was not the worst hit by a slowdown sparked by a clampdown on auto credit nationwide.
"That has not impacted the luxury segment as much as it may have other segments," Hale said.
But "we're certainly watching macroeconomic factors and looking at efforts to curb the loans," he added.
LOOMING GLUT, BRAKING SALES
DaimlerChrysler sold 5,500 Mercedes in the first half, all of which were imported. Executives said last month the company aimed to move 14,000 units this year after selling 9,200 last year.
Multinationals are collectively spending some $13 billion to boost capacity to about 6 million units annually by the end of the decade, prompting fears of a margin-eroding glut.
And sales are braking.
Sedan sales in China racked up their third straight month of decline in June, when they also posted a year-on-year increase of just 4.8 percent.
China's car sales nearly doubled in 2003 to about 2 million vehicles. Analysts now predict growth this year of just 10 percent to 20 percent.
Mercedes competes with German rivals BMW AG and Audi, the luxury arm of Volkswagen. It also faces competition from GM's Buick brand and Lexus, the high-end brand of Japan's Toyota Motor Corp.
DaimlerChrysler plans to start making Mercedes in China in the middle of next year.
It signed a $1.1 billion deal last year with venture partner Beijing Automotive Industry Holding Co. to produce 25,000 C-class compact cars and E-class mid-sized sedans.
