Auto dealers in China's Yangtze River Delta region warn of “serious challenges”
BEIJING (Reuters) – Auto dealers in one of China’s wealthiest regions are attracting automakers to intensify sales strategies on their cash flows and high inventory pressures, another sign that the world’s largest auto market has created a price war.
On Monday, four dealer associations based in the Yangtze River Delta and Jiangsu, Jiangmin and Anhai provinces posted a joint letter on their WeChat accounts on Monday, with the pressure they faced public.
Most automakers sell their vehicles in China through dealers, while the Delta region accounts for 23% of domestic car sales in 2024.
“Auto dealers in the Yangtze River Delta region are facing serious challenges such as high inventory, increased risk of market competition and capital chain breakdown,” the letter to “all automakers” said.
They added: “Some automakers force dealers to sell new cars at lower than the cost.”
Last week, the dealer associations in Henan and Jiangsu provinces sent similar letters, while suppliers and dealers asked automakers to pay more quickly.
The complaint shows that Chinese automakers continue to engage in a years-long price war despite regulators ordering the strategy to integrate into the industry’s profitability and financial position.
The four dealer associations also said inventory is above healthy levels. They added that car loans in the region have gradually suspended the problem since June, causing the problem to consumers who think they have the financing to be unable to pick up the car.
Dealers have made many suggestions, including that automakers should allow them to propose reasonable inventory restrictions and adjust sales targets to better understand the capabilities of regional markets.
China's legislature passed an amendment to the Anti-Indecent Competition Act last week. The revised law strengthens rules for forced pricing that are less than costs and will take effect in October.
(Reported by Qiaoyi Li, Zhang Yan and Brenda Goh; Editor of Kate Mayberry)
