Net income dropped to 246 million yuan (HK$232 million), or 0.15 yuan a share, from last year's 360.7 million yuan, or 0.29 yuan per share, based on Chinese accounting standards.

The growth pace of Changan's car sales has slowed as consumers postponed their purchases while carmakers slashed prices.

"The earnings decline was caused by reductions in car prices,'' Zhang Xin at Guotai Junan Securities said. "Fourth-quarter profit may improve as price cuts ease in China.''

Changan's yuan-denominated A shares, reserved for domestic investors and some overseas institutional investors, fell 4.5 per cent to 6.34 yuan at the midday lunch break in Shenzhen. Its B shares, open to all investors, dropped 0.7 per cent to HK$4.08.

Third-quarter sales dropped 3 per cent to 3.3 billion yuan from 3.4 billion yuan, Changan said.

Changan, based in the southwestern city of Chongqing, said it is assured of sales of 500,000 vehicles this year, cutting its earlier sales target of 530,000 units by almost 6 per cent.

Changan makes Star minivans, Suzuki Alto mini cars and is a partner in a US$108 million (HK$842.2 million) venture with Ford that makes Fiesta compact cars and Mondeo sedans.

The prices of Suzuki vehicles were cut twice this year in China and Ford models were discounted once.

Early last month, Changan cut the price of Star minivans by an average of 4.7 per cent to boost sales. Last week, Beijing-based dealers cut the price of Ford's 2.5-litre Mondeo sedans by 7 per cent to 250,000 yuan.

In the first nine months of the year, Changan sold 339,449 vehicles, almost 22 per cent more than the same period last year.

Production rose by 28.5 per cent to 350,659 units, it said.

The carmaker's profit dropped by 9per cent to one billion yuan in the first nine months from 1.1 billion yuan a year earlier. Sales rose 18 per cent to 13 billion yuan.BLOOMBERG