90% auto dealers lose money in H1,30% probably to shut down

As depression in Chinese auto industry worsening in the past seven months and foreseeable future, 30 percent dealerships might shut down in the near future on the basis that almost 90 percent dealers suffer deficit in the first half of the year, according to the report of China Auto Dealers Chamber of Commerce (CADCC).

China witnesses the fourth consecutive monthly pair drops in domestic sales and production in July on a month-on-month basis. In accordance with the statistics of China Association of Automobile Manufacturers, vehicle production quantity in July in the country dropped 11.76 percent from a year earlier to 1,518,000 units, while sales slid 7.12 percent to 1,503,000 units compared with the same period of last year. In the first seven months, Chinese vehicle production and sales growth rate slumped to 0.8 percent and 0.39 percent from a year earlier.

In such adverse situation, around 90 percent of dealers in China reported deficit in the first half. Additionally, in the after-sales market, much less consumers would revisit dealerships after the warranty period, so that dealerships suffer loss in the after-sales market, too. It is estimated that about 30 percent of the overall dealerships probably will shut down in the near future.

By July 30, only 4 automakers out of the 17 Chinese domestic mainstream ones achieve their half year sales target, which encompass Changan Auto, Geely Auto, Chery Auto and JAC (Jianghuai Automobile). In terms of joint-ventures, Volkswagen, the best performer, realizes 940,470 units in the first half, falling little behind its half year target 950,000 units, while others lack at least 5 percent of its planned half year sales.

On the other hand, dealerships suffer after-sales market shrinking as the amount of money in average deal with consumers slumped acutely from last year. For example, in the luxury vehicle after sales market, the average amount of money in after-sales deals dropped form 4,288 yuan to 3,480 yuan. In terms of mainstream vehicles, the average amount slid from 1,710 yuan to 1,558 yuan compared with the same period of last year.