China: how the slowdown is making automakers treating it like any developed country image

The Chinese economy is not in a crisis yet it has shrunk to the smallest growth in more than two decades, dragging down with itself the auto market – the world’s largest.

As car sales are nearing an unexpected collapse, carmakers are now developing strategies that actually mirror the plans made in the more developed and established markets, in a bid to gain every possible dollar because they are heavily reliant on the market that just the other day was coming with double-digit annual profits. For example, they are now putting an emphasis on the sales and financing services that are well established and catered for in developed markets such as the US or Europe. That’s because in China new vehicle deliveries have a “ridiculous” quota of more than 70 percent of dealer profits – a stark difference to Britain for example, where the percentage is of just 5 points. There the dealers source their profits from repairs, insurance and financing strategies, according to an executive of a group of luxury dealers in China.

In the recent years the growth has been so tremendous as the country jumped from being an underdeveloped market buying mostly locally made cars to the world’s largest auto market. In the same time it also became a major cash cow for the global automakers thanks to sales surging with double digit percentage points. But this year “times they are a changing” as many forecast a negative outlook for the first time in more than two decades. This means manufacturers now need to invest in training programs in a bid to show the dealers how they can spread their businesses beyond the sales of new autos.

Via Reuters