2014 proving to be a very tough month for Beijing automobile market, analyst saids.

According to the China Association of Automobile Manufacturers, total production and sales numbers for Chinese automobiles over the first eight of the months totaled 1.52 million units and 1.5 million units, respectively. The two figures represent year-on-year growth rates of 8.61 percent and 7.67 percent, respectively. These rates were much lower in the month of August; with production and sales numbers growing 2.22 percent and 4.04 percent, respectively. Those production and sales figures represent a clear decline from the previous month. Industry analysts point out that dealerships in first-tier cities are suffering severely from market pressures.

In an interview with the Beijing Youth Daily, Su Hui (pictured), deputy head of the China Automobile Dealers' Association's (CADA) market department and former deputy general manager of the Beijing Yayuncun Automobile Market, commented on the state of the automobile market in Beijing.

Several automobile dealerships selling vehicle ranging from own brands to luxury brands attended a recent dealer conference in Beijing. The majority of the dealerships at the conference stated that, although they had successfully completed their sales goals for the first eight months of the year, they were still pulling in a net deficit.

Mr. Su, who also attended the conference, explained that this phenomenon was not caused by problems with the market, but were due to the strict automobile registration limitations put in place in major Chinese cities. He pointed out that the policies in Beijing in particular are much stricter now than they were a few years ago, due to the legislation that goes as far as restricting the free flow of the used car market.

Presently used car sales account for 60 percent of all automobile sales in Beijing. In other words, over half of first-time automobile buyers in the city get their vehicles from the used car market. This increased demand has caused prices to skyrocket, in turn driving away a lot of new buyers and causing sales growth rates from May to August to continuously decline.

According to statistics from the CADA, there are currently just over 450 certified dealerships in Beijing. Over the past few years approximately 20 new dealerships have opened for business annually; however, due to 2014's poor market conditions, only ten new dealerships have entered the market so far this year.

According to Mr. Su, if just 800,000 automobiles were sold in Beijing over the course of a year, dealerships would have a large margin of expansion to prosper and thrive. However, due to tough legislation, sales in the city have nearly halved, which has made times tough for dealerships. Beginning in April, dealerships started slashing prices in an effort to boost sales, leading to falling profits. Over 20 automobile dealerships, including those of luxury brands, left the industry entirely. Several own brand manufacturers have been forced out of the Beijing market due to this exact reason.

Coming into August, several dealerships even started halting acquiring new stock, leading to slight changes in their relationships with automobile manufacturers. Why has the automobile market in the city not collapsed entirely? Mr. Su states that this is due to the timely preparations manufacturers made when the automobile restriction policies on the verge of being implemented, which has helped ease some of the pressure their dealerships have had to face.

Mr. Su emphasizes that the Beijing automobile market, if left unfettered, has no problems itself. He explains: "According to statistics, Beijing's population has now reached 21 million people; however, due to the automobile lottery system, over seven million of these 21 million people have no way to purchase an automobile. If policies were relaxed, the Beijing market's sales growth would be on the level of the rest of the country."

At the end of last year, manufacturers from across the industry had set 2014 sales growth targets of over ten percent. However, with current production and sales numbers wavering around eight percent and continuing to decrease, a definite divide has begun to separate the industry between manufacturers whose performances are far above expectations and those that are just trying to survive the storm.

Mr. Su believes that there are far too many dealerships servicing the Beijing automobile market. He predicts that approximately 40 percent of dealerships in the city will suffer net deficits this year and that about a quarter will leave the market entirely. Surviving dealerships will be forced to expand into other sectors, such as used car sales, in order to maintain their competitiveness.