Great Wall Motor Co. (2333), whose shares were suspended from trading today, told dealers to stop taking orders for its new Haval H8 SUV because it cannot make enough of the vehicles, two people familiar with the matter said.
The Baoding, China-based carmaker informed dealers this week, according to the people, who asked not to be identified because the information hasn’t been made public. Zhao Lijia, an official with Great Wall’s media department, said he hadn’t received any relevant information.
The H8, Great Wall’s most expensive sport utility vehicle, has triggered investor concerns before. In January the carmaker said it would delay the launch of the vehicle after the automotive press panned it in test drives, causing the company’s shares to tumble 12 percent, their steepest drop since 2008, the following day.
“I can’t really recall any other automaker stop taking orders soon after they started so this is quite unusual,” said Han Weiqi, a Shanghai-based analyst with CSC International Holding Ltd. “If they can’t give a convincing reason, people may start to wonder whether there are other untold stories behind the suspension.”
Great Wall shares fell 6 percent yesterday in Hong Kong trading, before the company suspended trading today, pending an announcement “in relation to inside information” of the company. Its Shanghai-traded shares, also suspended today, dropped 4 percent yesterday.
Great Wall, China’s largest SUV maker, said on Jan. 13 it decided to push back the H8 by three months after detecting that the vehicle had issues ranging from the brakes to low steering resistance and excessive noise.
Engine of Growth
The automaker started to deliver the H8 on April 21 during Beijing Auto Show, according to a posting on its website. Sales of the car started in cities including Beijing, Xi’an, Chengdu, Guangzhou, Kunming and Harbin.
H8 is the automaker’s first high-end SUV model. The car is priced from 201,800 yuan ($32,390) to 236,800 yuan, according to Autohome, a car-pricing website.
Great Wall has about 1,000 pre-orders for Haval H8 and the company is targeting sales of 3,000 and 5,000 units for the vehicle in May and June, and 30,000 to 35,000 this year, Ole Hui, a Hong Kong-based auto analyst with Mizuho Financial Group Inc. (8411), wrote in a research note last month.
“H8 is very important for Great Wall and it is seen as the next engine of the growth for the company given it is their first high-end model,” said Han at CSC International. “The importance works as a double-edged sword and it will be quite a blow to the company if the model for some reason fails to meet people’s expectations.”
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