Kia Motors Corp., South Korea's second-largest carmaker, saw its sales in China last month plunge 38.9 percent on month, amid a dispute with some of its Chinese dealers over inventory, according to company and industry sources on Sunday.
Kia's sales fell to 30,080 units in January in China, from 49,259 units in December last year.
Industry sources suggested that Kia may seek to reduce its unsold cars before it begins selling new models.
The sharp decline in China sales came as some Chinese dealers reportedly asked Kia to pay compensation due to losses that stemmed from the unsold cars.
Yoo Ji-woong, an analyst at eBest Investment & Securities, said in a report that Kia's sales in China were partly hit by a decline in production as Chinese dealers demanded the company pay compensation.
This year, the growth in the Chinese auto market is expected to slow to 4.4 percent as the Chinese government ended tax benefits for new car purchases.
Kia targets a 7.7-percent rise in sales this year in China. (Yonhap)