Calling out the distributor losses, a group representing Toyota dealerships in one of China’s richest provinces has called out the Japanese automaker to raise its financial aid and lower the annual sales targets.
According to the Jiangsu Automobile Trade Management Association, at least 80% of the dealers in Jiangsu province that work for Toyota’s joint venture with China FAW Group saw losses or merely broke even – with some of them staying on top of 10 months worth of inventory. The association added in a statement that it wants the largest automaker in the world to lower sales thresholds, raise the number of dealerships at a constant pace and support the distributors in setting up the after-sales business. According to analysts, the dealers in China are coerced to constantly give up profit – the automakers ask them to take larger inventories to support increased factory production while the competitive market constantly squeezes out lower prices.
China, the world’s largest auto market and the second globally when it comes to luxury automobiles, has seen competition becoming fierce as more global carmakers enter the country and many of them localize production. According to figures from the China Automobile Dealers Association, the outstanding stock on dealers lots has climbed to the highest level since August 2013 in November.