Chinese car dealers have called on carmakers to stop offloading too many cars on dealerships, as intense price wars are pressuring their cash flow, driving down their profitability and forcing some to shut.
The proposal on Tuesday came on the heels of an official call at the weekend for the motor industry to halt bruising price wars.
Conditions facing car dealers have become “even more severe” amid a new round of hefty discounting since the second quarter, the China Auto Dealers Chamber of Commerce said in a statement.
Carmakers should set reasonable annual production and sales targets and should not transfer inventory to dealers and force them to stockpile cars, the chamber proposed on Tuesday.
The cycle of payments to dealers should be shortened and dealers “shall not be coerced to withdraw from the network and close their stores in the name of optimising network channels”, it said.
A large dealer of Chinese electric vehicle maker BYD’s cars in the eastern province of Shandong went out of business with at least 20 of its stores found to be deserted or shut, local media reported last week.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.