BMW AG yesterday announced that it has begun offering interest-free loans to its customers in China in a bid to help boost sales after weak domestic demand resulted in a drop in year-on-year sales in August for the first time.

Customers buying the BMW 320i and BMW 523i luxury sedans made by its Chinese venture, BMW Brilliance Automotive Ltd, will be offered the interest-free loans, the company said in a statement yesterday.

They have the option of a down payment of 30 percent or 40 percent for a two-year loan or a three-year loan during a promotion which covers 19 cities nationwide from September to November.

Sales in China's passenger car market reversed 5.4 percent to 434,271 units last month, the first year-on-year decline in the past three years.

The drop since the second quarter of this year was blamed on high inflation that ate into the buyers' budget and on higher oil prices which dented market demand.

Big-engine powered luxury sedans also face more challenges in the second half of this year, such as the higher consumption tax that could greatly increase the car price.

First-half sales of BMW, along with its Mini and Rolls-Royce brands, rose 28.1 percent to 30,325 units in China's mainland, against a 43.2-percent surge in the first quarter of this year.

As the market turned softer, car makers have been struggling to meet full year sales forecasts and have stepped up various measures including price cuts to raise competitiveness and attract customers.

Chang'an Ford Mazda Automobile Co Ltd yesterday announced a cut in the price of its Mondeo by up to 20,000 yuan (US$2,924) to better compete against Honda's Accord and Toyota's Camry. The Mondeo now sells from 169,800 yuan to 223,800 yuan.

Shanghai General Motors Co Ltd also lowered the price of its Cadillac SLS luxury sedan by up to 11 percent. The 2.8-liter SLS now sells for between 448,000 yuan and 498,000 yuan.