The nation’s No. 2 carmaker Kia Motors saw its sales in China plummet 38.9 percent last month, according to company and industry sources on Sunday.

Kia Motors said it sold 30,800 units to its Chinese factory in January, down 18,459 vehicles compared to the 49,259 units sold during the same month last year. Retail sales have also dropped 13.1 percent.

According to news reports, a number of industry insiders suspect the slump in sales is linked to Chinese dealers demanding Kia compensate them for the decline in sales and losses stemmed from unsold cars. Some dealers reportedly declared they would not accept any of the company’s vehicles until the inventory level fell below the 1.2-month sales volume.

However, officials of Kia Motors have contended that the situation with local Chinese dealers is not the issue, rather it is the company’s lack of a SUV lineup that is being cited as the reason behind sluggish sales in China last year.

Kia is targeting a 7.7-percent increase in sales in the Chinese market this year.

In an effort to drive Kia’s sales momentum in the Asian nation, the automaker announced last month its 40,000 sales target of its new KX7 SUV model, following the vehicle’s official launch in China in March.

The company also announced it will roll-out its new K5 plug-in hybrid and Forte compact sedan into the Chinese market following the release of the KX7.

By Julie Jackson (juliejackson@heraldcorp.com)