In Beijing, BMW dealerships are giving markdowns of as much as 19 percent on a 3-series car, while some Mercedes dealers are selling the C-Class Elegance model at 20 percent less than the suggested retail price, according to, a pricing guide tracking more than 3,000 dealers in the country.

BMW, Daimler and Audi, the three largest luxury carmakers, face slowing sales growth and falling prices in China, the world’s largest automobile market, as some cities impose driving curbs and the central bank tightens lending. The growth in demand for high-end vehicles cooled to 29 percent the first eight months of this year from 48 percent in 2010, according to researcher J.D. Power & Associates.

“We’re in a cycle of dropping prices,” said Scott Laprise, a Beijing-based analyst at CLSA Asia Pacific Markets. “Dealers are worried about sales slowing and are cutting selectively in the luxury segment. They see where the overall market is going. They want to be preventive and keep their sales going.”

‘Aspirational Buyers’

A tightening Chinese economy may cause “aspirational” buyers, such as those in mid- to upper-level management jobs, to rethink or delay luxury purchases, Laprise said.

China’s central bank raised interest rates five times in the past year to curb inflation, and the city of Beijing started restricting the number of license plates available beginning in January to fight pollution and congestion. The measures are contributing to slowing car demand, according to analysts at CLSA, J.D. Power and Booz & Co.

BMW, Daimler and Audi are targeting record sales in 2011 on growing wealth in China, which overtook Germany to become Audi’s largest market this year. Rising affluence has helped luxury brands outperform growth in the overall auto market, which the China Association of Automobile Manufacturers forecasts will slow to 5 percent this year from 32 percent in 2010.

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