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Wednesday, June 06, 2012

Good Article About Chinese Autos

Well, realistic:
Average inventory carried at Chinese dealerships bloated to a level exceeding two months of sales by the end of May, compared with more than 45 days at the end of April, Luo Lei, deputy secretary general of the state-backed China Automobile Dealers Association, said in an interview yesterday. That’s forcing dealers to deepen discounts and sell cars at a loss to meet mandatory sales targets set by automakers, he said.
In the showrooms, surging inventory will lead to intense price competition, forcing out weaker dealerships that can’t absorb losses, Luo said. There were about 21,000 dealership outlets in China as of the end of 2011, compared with 16,000 the year before, according to Luo. 
The increase in dealerships alone would greatly swell reported car sales because of stocking.  The problem is that the Chinese consumer apparently isn't absorbing the inventory.

I keep reading that incentives and discounts on the less-popular models are in place, and I know that some cities are starting incentive programs again. Also, the domestics have been hurt - there's a lot of truth to this blog post. The shift to the up-end market clearly seen last year is continuing, and it doesn't say much for the auto market in China.

The first article implies that perhaps some of the foreign reported car sales are illusory.

Update: I got to cars because I was wondering just what use the new steel capacity would be? 

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