China’s auto dealers have urged car manufacturers to halt the excessive supply of vehicles to showrooms, as deepening price wars and overstocking continue to strain dealer cash flows, cut into profit margins, and force some outlets to shut down.
The call was issued on Tuesday by the China Auto Dealers Chamber of Commerce (CADCC), which said conditions for dealerships have become “even more severe” amid a fresh wave of discounting that began in the second quarter. The statement follows an official government appeal over the weekend for automakers to stop aggressive pricing tactics that have disrupted market stability.
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The chamber warned that excessive inventory transfers are burdening dealerships and called on automakers to “set reasonable annual production and sales targets” while ending the practice of pushing unsold cars onto dealers’ lots. It also urged manufacturers to shorten the payment cycle and not pressure dealers to exit networks under the guise of restructuring or optimization.
“Dealers shall not be coerced to withdraw from the network and close their stores in the name of optimising network channels,” the chamber said in its proposal.
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The strain has already begun to show. Last week, local media reported that a major dealer representing Chinese electric vehicle maker BYD (002594.SZ) in Shandong province had gone out of business. At least 20 of its outlets were found deserted or closed, highlighting the financial pressure building on retail networks amid ongoing pricing battles.
Source: Reuters