Dongfeng Honda's CR-V Photo: IC

Sales of the CR-V compact SUV, produced by the joint venture between Japan's Honda and its Chinese partner Dongfeng Motor Group, unexpectedly dropped out of the top 10 SUV sales list in July.

In the whole year of 2013 and the first six months of this year, the model ranked third in the list. However, its sales dived to 5,996 units in July from 16,196 units in June, ranking 16th in the SUV market, according to data from industry portal chooseauto.com.cn earlier this month.

Haval H6, produced by domestic automaker Great Wall Motor, Tiguan from Shanghai Volkswagen and the RAV4 from FAW Toyota were China's three most popular SUVs in July, data showed.  

With local production beginning in 2004, the CR-V SUV has always been a star SUV model in China. In April, sales of the model in China hit 1 million units - the first SUV model to reach this number in China.

"It is quite unusual to see such a sharp drop. It is probably caused by inventory adjustment, to pave the way for new models," Wu Shuocheng, an analyst at industry consultancy Menutor Consulting Shanghai Co, told the Global Times on Monday, adding that sales of the model may recover in the rest of this year.

In the first seven months, the company sold a total of 101,018 units of CR-V SUVs, ranking third. However, despite still managing to keep a spot in the top three list, experts noted that increasing competition is also threatening the model's sales.

Middle of the road

Priced between some 170,000 yuan ($27,700) and 240,000 yuan, the CR-V is targeting the middle segment of the SUV market. But with increasing options in the SUV market, such as Volkswagen's Tiguan and Ford's Kuga, the model's share is being chipped away, Wu noted.

Other models of Dongfeng Honda are also experiencing dropping sales. In the first seven months, sales of its sedan model Civic dropped 15.3 percent year-on-year to 31,800 units and its Spirior sedan model dropped 42 percent year-on-year to 2,645 units during the period, media said.

Wu noted that another problem of Dongfeng Honda is that it does not have a rich product line and has been relying too much on sales of the CR-V.

The company is currently upgrading its models, but not fast enough, according to independent industry watcher Zhang Zhiyong.

Sales of major Japanese carmakers were seriously dented when Japan announced the "nationalization" of the Diaoyu Islands in September 2012, which triggered strong anti-Japan sentiment among Chinese consumers.

Zhang noted that the incident may have delayed Dongfeng Honda's plan to upgrade its models. 

Dongfeng Honda did not respond to the Global Times' request for an interview by press time.

Not alone

The incident in 2012 is still impacting potential car buyers in China, according to Zhang, as Japanese carmakers' market share has still not fully recovered and major firms have seen sales decline in July.

Nissan, together with its Chinese joint venture, sold 79,500 units of cars in China in July, down 12.3 percent on a yearly basis. Toyota sold 74,800 units of cars in China in the month, down 1.1 percent year-on-year and the Honda brand sold a total of 39,500 units in July, dropping 22.7 percent year-on-year, data from the companies showed.

Japanese carmakers sold a total of 209,600 units of passenger cars in China in July, accounting for 15.34 percent of the market in the month, but the share was as much as 19 percent before September 2012, according to data from the China Association of Automobile Manufactures.

German carmakers accounted for 22.78 percent of the passenger car market in July, the highest among all foreign brands.

"Japanese cars are of decent quality, but it is not easy for them to catch up with their German peers any time soon," Zhang said.