Chinese auto industry may bid goodbye to fast growth rate in the adverse situation

The automobile industry in China will remain a low and medium growth rate for a very long period China according to the statement of Qu Guochun, a Deputy Director in Ministry of Industry and Information Technology. Additionally, Chinese automobile industry is experiencing industrial structure adjustment under the influence of “Internet plus” and automatic drive technology. In the turbulent background, the adverse situation may linger for a long time among dealerships, some of which have been encountered with capital chain rupture.

Additionally, automobile market in some big cities of first-tire and second-tier become saturated in the fast development of Chinese auto industry, thus sales growth cannot remain as before. Many cities implemented the policies of purchase limits for the sake of relieving traffic jam, which has hindered further expansion of the industry.

The automobile industry sales growth rate in China has dropped from 24 percent of 2000 to 2010 to 7 percent in 2010 to 2014. As the competition in automobile market becoming increasingly fierce, the profit capacity will suffer more severe influence in the future. Money chain been cut out, many dealers are exempted from the capacity of paying mortgage back to the banks. Many 4S dealers have shut down out of huge deficit.

In the first half of the year, nearly ninety percent dealerships have suffered deficit according to the data of China Auto Dealers Chamber of Commerce. It is predicted that more than thirty percent will shut down in the adverse situation.