HONG KONG -- China's third-largest carmaker, Dongfeng Motor Corp., has filed an application with the Hong Kong exchange for an IPO, market sources said on Monday, but the offering may be just 60 percent of earlier plans.
"It won't hit $1 billion (U.S.) for sure," said a source close to the deal, referring to a figure people familiar with the situation set in April. The company has not finalized the size for the initial public offering, the source said.
Euphoria for new listings from China has cooled as auto sales growth have slowed, another source said.
The company, which makes sedans through joint ventures with Japan's Nissan Motor Co. and France's PSA Peugeot Citroen, plans to sell up to 30 percent of its enlarged share capital around November or December, the source said.
China's monthly sedan sales volume dropped to below 50,000 units in May from more than 200,000 in March. Sedan sales grew 3.7 percent from a year earlier in July to about 170,000 units -- a slight improvement over the 2 percent growth in June.
The decline from a month earlier narrowed to less than 1 percent from 4 percent in June and 19 percent in May.
As China plans to remove import quotas by 2005, analysts worry that domestic auto makers will face excess supplies caused by heavy capacity expansions. JP Morgan, which holds a negative view on China's auto sector, expects China's sedans to be oversupplied by 11 percent in 2004 and 23 percent in 2005.
Shares in Denway and Brilliance China have dropped 30 percent and 58 percent respectively since early June.
Dongfeng has appointed China International Capital Corp., Deutsche Bank and Merrill Lynch to handle the listing.