China car dealers urge automakers to stop dumping inventory on them

BEIJING: Chinese auto dealers today called on automakers to stop offloading too many cars on dealerships, as intense price wars are pressuring their cash flow, driving down their profitability and forcing some to shut.

The proposal came on the heels of an official call over the weekend for the auto industry to halt bruising price wars.

Conditions facing car dealers have become "even more severe" amid a new round of hefty discounting since the second quarter, the China Auto Dealers Chamber of Commerce said in a statement.

Automakers should set reasonable annual production and sales targets and should not transfer inventory to dealers and force them to stockpile cars, the chamber proposed today.

The cycle of payments to dealers should be shortened and dealers "shall not be coerced to withdraw from the network and close their stores in the name of optimising network channels," it said.

A large dealer of Chinese electric vehicle maker BYD's cars in the eastern province of Shandong went out of business with at least 20 of its stores found to be deserted or shut, local media reported last week.