China: rising inventories hurt sales in November image

Because of rising inventory stockpiles in the world’s largest auto market, last month new car deliveries rose at a slower pace than before – climbing just 5% to 1.71 million units.

According to a statement posted on its website by the Passenger Car Association – China’s retail deliveries of cars, multipurpose and sport utility vehicles were up only 5% to 1.71 million vehicles in November. The increases compare to October’s figures, when deliveries rose 9.3%. A separate dealer group commented on the situation, saying that the measure of vehicle inventory was up to its highest level this year last month. “There are more and more auto dealers selling vehicles at losses as they struggle to keep afloat,” said Wang Ji, a Beijing-based director at the dealer chamber of commerce. According to the China Auto Dealers Chamber of Commerce, the dealers are dropping the prices in order to meet their intended goals – automakers set them and they need to qualify in order to get the traditional year-end bonuses. The latter make up more than 50% of their full-year profits.

Global automakers, racing to capture market share in the world’s biggest auto market, are increasingly showcasing plans to establish or increase the local production levels – allowing them to lower build costs and set better prices.

Via Bloomberg