Auto Sales Down Over Golden Week
Auto sales have fallen by nearly one-third during the
Chinese national day golden week which began on Oct. 1.
In many instances, auto dealers have had few, if any,
customers over the holiday.
Customers are unable to register their new cars over
the holiday because all government offices are closed.
This year, auto makers have been aggressively cutting
their prices to clear inventory, but credit-tightening
policies by the government have made it more difficult
to get car loans.
The price cuts have been hurting many of the dealers,
since potential buyers are expecting the trend to continue.
It is now widely known that inventories are high, and
prices will fall further as makers ramp
up production.
As more makers pile into the Chinese market, it is proving
increasingly challenging to turn
a profit. The trend means that the smaller makers
will either close or be acquired, or shift
production outside China, while the larger firms who
can afford to continue in the China market will grow bigger,
but the margins they originally projected will be smaller.
The larger firms will shift to exporting a large portion
of their China-produced cars worldwide, as their costs
in China will be lower than in most other countries, while
their workforce in China is highly productive.
This will in turn lead to a consolidation of manufacturing
in China from other areas around the world.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
