Zhejiang Geely Holdings Group has cut its sales growth from 30 percent to 20 percent this year, Chairman Li Shufu said, adding that it will stop making cars costing less than 40,000 yuan (US$5,882).

China's largest privately owned car maker attributed the slower growth to rising material costs and a tough economic environment.

''I have to say we have revised the sales target and we will avoid a price war,'' Li said at the Operation and Management Innovation Summit 2008 over the weekend.

He added that making cheap cars at a time of increasing material costs ''won't help anyone survive.''

In 2007, Geely's sales totaled more than 219,200 units and some of its models cost only 20,000 yuan. Geely will instead focus on cars costing above 40,000 yuan.

In August, domestic vehicle sales dropped month on month for the first time this year, according to the China Association of Automobile Manufacturers.

The sluggish car sales came amid an economic slowdown and the sluggish stock market, which lost almost two-thirds of its value since October.

Geely said two weeks ago that it will start mass producing methanol-powered vehicles by the end of the year.

(Shanghai Daily September 22, 2008)