China’s car dealerships have called on the country’s automakers to stop foisting price wars on them, as intense competition over who can charge the least is threatening their survival, China Daily and Reuters report.
In a statement issued on Tuesday, the China Auto Dealers Chamber of Commerce said that dealers were struggling with weakening margins, rising inventory levels, tighter liquidity and overall operational stress.
“The situation worsened notably since the second quarter as a fresh wave of discounts, led by major EV [electric vehicle] players, spread through the market,” the chamber said. “Price wars may win headlines, but they are dragging the entire industry into a downward spiral.”
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The statement came on the heels of a pledge from the central government to tackle unfair competition. The China Association of Auto Manufacturers has also urged its members not “dump goods at prices below cost,” Reuters says.
The pressure has already caused some dealerships to shut, including a multi-store dealer for BYD’s EVs in Shandong Province.
Dealers have issued a number of recommendations for industry reform, urging automakers to stop confusing consumers with frequent price changes and to set reasonable annual production and sales targets that are aligned with actual demand. They also warned manufacturers to stop offloading excess inventory onto dealers.
The chamber said that manufacturers should not be “coerced to withdraw from the network and close their stores in the name of optimising network channels,” and noted that those exiting the industry needed to be fairly compensated.
