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By Bloomberg

Volkswagen AG lowered its global sales forecast for this year amid growing concern among automakers about the slowdown in China, the world’s biggest car market.

Deliveries will be about at the 2014 level, the Wolfsburg, Germany-based carmaker said Wednesday in a statement that also cited challenging markets in Russia and South America. It had previously forecast a moderate increase in vehicle sales this year.

VW’s deliveries in China dropped for the first time in a decade in the first half. The year is shaping up to be no better for the industry as a whole, as China’s economic slowdown and volatile stock market coincide with curbs on auto registrations in some areas. Carmakers may see Chinese sales drop for the first time since 1998, Ford Motor Co. said Tuesday.

“It had to be expected to some extent that the sales guidance needed to be cut, given the recent market slowdown,” said Juergen Pieper, a Frankfurt-based analyst for Bankhaus Metzler. “The others aren’t faring any better, if you look at Toyota or Peugeot.”

PSA Peugeot Citroen, Europe’s second-biggest carmaker after VW, also cited the tough market in China when it reported results today. Despite more than tripling its first-half earnings, the French company didn’t raise earnings forecasts. Chief Executive Officer Carlos Tavares pinned that on an “unstable international environment,” and the company said it’s focusing on how to adapt to the steep slowdown in China.

VW saw profit from its Chinese joint venture fall 17 percent in the second quarter to 1.15 billion euros ($1.27 billion), based on calculations by Bloomberg News.

“We are keeping a very close watch on global macroeconomic trends, especially where there are uncertainties such as in the Chinese, Brazilian and Russian markets,” VW CEO Martin Winterkorn said in Wednesday’s statement.

Shares Drop

The preferred shares fell as much as 3.1 percent in Frankfurt, trading down 2.4 percent to 186.2 euros at 10:47 a.m. VW returned 5.6 percent, including reinvested dividends, this year prior to today. That compares to a 14 percent return by Germany’s benchmark DAX Index.

Even with tougher markets, operating profit in the second quarter increased 4.9 percent to 3.49 billion euros, underpinned by gains at the Porsche and Audi luxury-car brands. The figure beat the 3.48 billion-euro average of 10 analyst estimates compiled by Bloomberg.

The operating return on sales declined to 6.2 percent from 6.5 percent, and the manufacturer stuck to a full-year target range of 5.5 percent to 6.5 percent.

Delicate Time

The market woes come at a delicate time for the world’s second-biggest auto manufacturer, which was shaken earlier this year by a power struggle that led to Chairman Ferdinand Piech’s sudden resignation.

VW is trying to boost profit by 5 billion euros before 2018 at its biggest unit, the namesake VW brand, and Winterkorn has said he’ll streamline the group’s rigid management structure, which has made it slow to adapt to trends such as the surge in global SUV demand. Winterkorn has said he’ll present his plan for more efficient management by the end of September.

The VW brand improved its first-half profit margin to 2.7 percent of sales from 2.1 percent, helped by its efficiency program and robust demand for the Passat and Golf Sportsvan models as the Western European car market recovers.

Still, that remains a far cry from a target of more than 6 percent of sales by 2018, and for VW as for others, the development of the market remains difficult to predict.

“We will be facing headwinds from the Chinese market as well as in Latin America in the second half,” Peugeot Chief Financial Officer Jean-Baptiste de Chatillon said Wednesday.