China’s Auto Dealerships Buckling Under $20 Billion Losses Amidst Price War and High Unsold Inventories

Chinese automobile dealers are grappling with a staggering loss of 20 billion dollars due to an ongoing price competition. The country's industry association cites sluggish customer demand and a backlog of unsold stock as the main contributors to dealerships' financial downfall.

The considerable losses have led to financial difficulties for dealerships as they've been burdened with substantial unsold stocks, placing them in a position where keeping afloat is progressively challenging, according to a report from the China Automobile Dealers Association (CADA) released on Monday.

The organization reported that they have presented their findings to the appropriate agencies, aiming to highlight the challenges that the industry is dealing with and to secure financial aid. The specific agencies were not disclosed.

"Dismal sales and stress from wholesale vendors have resulted in car dealerships having an excess of inventory," stated CADA. "To alleviate financial hardship and lower loan expenses, dealerships are compelled to sell cars at discounted rates." CADA further noted, "The continuous price competition has escalated the problem of dealers selling at a deficit, where their losses increase with every additional car they sell."

The report indicated that car dealerships are grappling with meeting their monetary commitments, and their window for maintaining adequate operational funds has been squeezed to its maximum extent.