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By Bloomberg

Volkswagen AG, which counts China as its largest market, posted the first decline in first-half deliveries there in a decade as demand slowed with the economy.

VW’s deliveries in China and Hong Kong fell 3.9 percent from a year earlier to 1.74 million units in the January to June period, the company said in a statement. First-half sales in China last fell in 2005, when deliveries slumped 14 percent.

Auto sales have slowed this year in China after economic growth moderated, more cities capped the number of new cars, and a volatile stock market diverted funds from vehicle purchases. Demand has slowed for VW and other carmakers in China despite increasing discounts and financial assistance to distributors.

“VW has about 20 percent market share, so their weakness is a symptom of broader market weakness,” said Robin Zhu, Hong Kong-based analyst at Sanford C. Bernstein & Co. “VW has problems of its own, the brand in particular is a very sedan- centric fleet in an environment where there is this big switch to sport utility vehicles.”

Sales of the namesake Volkswagen brand fell 6.9 percent in the first half, while the premium Audi marque increased 1.9 percent. Skoda posted a 5.8 percent gain.

Among the group’s other brands, Porsche deliveries climbed 48 percent to about 29,400 vehicles, while Lamborghini sold more than 100 cars for a 66 percent increase.

“Faced with the ‘new normal’ market conditions, Volkswagen Group China plans to maintain our clear lead in the market,” Jochem Heizmann, head of VW’s China operations, said in the statement. “With China being a key market for the Volkswagen Group, we aim for long-term qualitative growth.”

The German automaker is unlikely to outpace the industry this year, Heizmann said in April. Audi has abandoned a target to sell 600,000 cars this year in China, two people familiar with the company’s plans said last week.