China: study reveals auto dealers leaving networks after 2014 profitability loss image

The latest trade group research shows that auto dealerships have no reason to rejoice after 2014 tally, with more and more deserting the sales networks last year on losses.

The China Auto Dealers Chamber of Commerce also took the pulse of the auto dealerships in the country, revealing that its least satisfied were the ones working for the Japanese brands Honda and Acura. At the other end of the scale sit Volkswagen’s AG Audi dealerships – no wonder, since the brand has the best sales of the premium segment. Without revealing too much details about the survey, the group also added that last year the dealerships sold more vehicles at a loss than before. Now, the profitability drop “not only threatens the survival and development of auto distributors, but more importantly affects the prospects of the auto manufacturing industry and ultimately the interests of consumers,” commented the group in a statement that was released jointly with the survey.

The study also falls in line with the rally of auto dealerships, which united in a common front against foreign automakers as they claim financial support and accessible sales targets. The profits were diminished last year as the market slowed to a 7 percent growth from 14% in 2013, while the sales networks continued their rapid expansion and remained almost entirely reliant on new-vehicle deliveries. Meanwhile, more cities decided to impose restrictions and cap new-car registrations to combat pollution and traffic jams, while the overall Chinese economy – the second-largest in the world, is predicted to crawl to its slowest pace since 1990 this year.

Via Bloomberg