ONE of the most frequent complaints last year from automakers selling imported luxury cars in China was supply falling short of demand. This year, their tune may be changing. With the Chinese market in the throes of change, the same dealers may find themselves with a glut of inventory.

On February 1, Lexus announced several new auto-finance initiatives on its CT200h and ES240 luxury sedans. Consumers can buy a CT200h at a down payment of 30 percent of the car price and low interest rates on three-year loans.

The measures were aimed at helping the Japanese brand catch up with Audi, BMW and Mercedes-Benz in the premium car market and at enticing more budget-minded first-time auto buyers.

Meanwhile, one Audi dealer in Shanghai also sold the imported Audi Q7 at 80,000 yuan lower.

Auto companies unveiling big promotions to meet annual sales targets is nothing new, of course. But this year, their reasons may run deeper than traditional marketing.

Many analysts are predicting a leaner year for car sales in China, the world's biggest auto market. That prognosis rests on slowing economic growth, anxiety about the European debt crisis and its possible ramifications, the continuing absence of government incentives, curbs on automobile registrations in some mega-cities and a market overflowing with car brands.

Cui Dongshu, an official from the China Association of Automobile Manufacturers, recently forecast that sales growth of imported cars may decelerate to 20 percent this year from 28 percent in 2011. Last year, about 1 million vehicles were imported into China.

Inevitable slowdown

Demand for imported cars in China has been on the rise for years, as higher disposable household incomes allowed people to buy the cars of their dreams. With sales growth came intense competition as nearly every foreign automaker elbowed for a bigger market share.

Ulrich Bez, chief executive officer of Aston Martin, said at the opening of the company's flagship showroom in Shanghai last month that the British luxury sports car maker hopes to have 10 dealerships in China by March, up from four last year.

He said the company expects to more than double its sales to between 500 and 700 vehicles this year.

Industry analysts agree that a slowdown in vehicle imports is inevitable, if only because the increases to date have been so breathtaking.

Porsche, for example, sold 24,340 vehicles in Chinese mainland, Hong Kong and Macau last year, up two-thirds from a year earlier. China also became the largest market for its Panamera premium sedan and Cayenne SUV.

All of Mercedes-Benz, Audi and BMW achieved sales growth over 35 percent in China last year.

But the problem is that imported car market, which accounts for 18 percent of all car sales, is especially vulnerable to the vagaries of the economy, both domestic and global.

Despite the personal consumption, there is also big purchases of premium imported models for business use.

"Imported vehicles, especially luxury cars, partly reflect the overall economic scenario," said Wang Cun, general manager of China Automobile Trading Co Ltd. "The ongoing European debt crisis and tightening macroeconomic policies in China have all had a negative impact on vehicle imports."

In January, the United Nations predicted that China's gross domestic product will slow to 8.7 percent this year from 9.2 percent in 2011. The Chinese Academy of Sciences forecast an even slower 8.5 percent expansion. Premier Wen Jiabao earlier said China would retain its tight monetary controls to fight inflation.

Cui from the automobile manufacturers' group warned that many car dealers face tougher times.

"Prodded by demand on certain hot-selling models, some dealers significantly increased their orders, which is very dangerous," said Cui. "High import volumes and flatter market demand in the fourth quarter of last year have already led to bigger price discounts in the market," he said. "Dealers need to be aware of the weakening market conditions."

Status symbol

Still, amid all the anxiety, there's a market for imported cars, which tend to be viewed as status symbols in China. China also encourages vehicle imports as part of the efforts to balance its foreign trade.

"Sales growth in the imported car market will continue to outpace the industry average this year, benefiting from vehicle updates and intensive new product launches," Ding Hongxiang, chairman of China Automobile Trading, told a recent forum.

The company said at least 28 new models and 12 redesigned vehicles will hit the market this year. It also predicts that the luxury end of the market will outpace industry-wide growth.

The manufacturers' association has forecast that overall vehicle sales on China this year will grow 8 percent to about 20 million units, rebounding from 2.5 percent growth rate last year.

The imported car market is changing as competition ratchets up.

"Foreign auto companies need to introduce more vehicles with smaller engine capacities and more environmentally friendly fuel systems to address China's greener standards," said Ding from China Automobile Trading.

Last year, sales of imported vehicles with engine capacity between 1.5-liter and 2-liter grew at the fastest pace and accounted for 28 percent of the total. About 83 percent of the total imported vehicles have their engine replacement less than 3-liter. Previously, Chinese consumers preferred big, gas-guzzling sedans as a means of displaying their wealth.

BMW, Audi and Mercedes-Benz have all retuned their focus to more entry-level models with smaller engine capacities.

Mercedes-Benz said the "younger" models, including its A-class compact luxury, B-class and CLS, now account for 40 percent of the company's sales in China.

BMW will begin sales of its domestically manufactured X1 compact SUV this year.

The China Association of Automobile Manufacturers Statistics said SUVs were the most popular imported vehicles last year, with sales rising 23 percent to 430,886. The category accounted for 41 percent of the all vehicle imports.

Automakers are keenly aware that their market presence doesn't depend solely on fancy new models. Consumers also want reliable after-sale servicing and maintenance.

Last October, Mercedes-Benz launched its My Service program to address that demand. The company said it planned to invest 150 million yuan in service facilities and training, and another 2 billion yuan in its parts distribution network in China.

Expanding dealer networks to inland cities would be another way to enhance sales growth, according to Ding.