As slow growth in the world's largest car market continued for a second consecutive year in 2012, auto dealers in China are facing huge financial burdens, with many facing closure.
Several Honda dealers have shut down recently, and in October last year there was a high-profile case involving the owner of three Citroen dealerships in Suzhou, East China's Jiangsu Province, who fled to evade her creditors, Beijing-based China Times reported on December 29.
"There was enormous pressure on auto dealerships in 2012, and more than 50 percent of the dealers of imported brands made a loss for the whole year. That ratio is about 40 percent for dealers of domestic brands, and 35 percent for joint-venture brand dealers," Luo Lei, vice secretary-general of China Automobile Dealers Association (CADA), told China Times.
CADA's comprehensive dealers' inventory index fell to 1.33 points in November, the association said in a statement on its website on December 28. But from February to October last year, the index was always above the official 1.5-point alarm line.
An index of between 0.8 and 1.2 points indicates reasonable inventory levels, while higher than 1.5 points indicates excessive stockpiles and higher operating pressure and risk, according to CADA.
Diaoyu Islands impact
Most of the slow-selling brands in November were imported Japanese luxury cars, with Nissan's Infiniti recording the highest individual inventory index of 4.9 points, CADA said.
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