Carmakers urged to work closely with dealers

An auto showroom in Yichang, Hubei province, uses its roof as a parking lot to store its unsold cars. Car dealers in China say sales will be sluggish for the second half this year. [Photo/China Daily]

Auto dealers want better cooperation amid wave of closures

As China's auto sales slow, the nation's chamber of commerce that represents car dealers called for better cooperation from automakers to stem the industrywide slump.

The China Auto Dealers Chamber of Commerce predicted that a number of so-called 4S dealerships－which incorporate auto sales, showrooms, services and spare parts－could shut down in the near future.

In a public letter issued on Wednesday, the chamber said it "strongly appeals to carmakers and dealers to face up to reality and strengthen cooperation because development in the auto market can only be sustained if carmakers and dealers work closely together".

In recent months, China's auto industry has been experiencing a major slump in sales growth. Vehicles sold in the first half of the year totaled 11.85 million units, only 1.4 percent higher than the same period a year ago, according to the China Association of Automobile Manufacturers.

It predicted that the auto market will grow by 3 percent this year from 2014, as a result of the nation's economic cooldown and its plummeting stock markets.

One of the biggest casualties of the slump has been the nation's auto dealers, which Wang Ji, the chamber representative, said are "in a bloody battle".

"It's unavoidable that a slew of dealers will quit. Some may withdraw voluntarily from the market, but others may be phased out. Many shops in Shandong and Henan provinces have already been shut down."

Last year, several Hyundai dealers in Shanghai closed up shop while several dealers simply stopped selling imported Renault vehicles.

Pang Da Automobile Trade Co, one of China's major dealership companies, said in its annual report that its network diminished by 125 to 1,226 last year.

Chinese media have reported that some dealership companies have gone bankrupt after failing to pay off loans.

"Carmakers have a dominant position in the industry, and the dealers have no say in the relationship. We need more communication and the chamber will offer help to the member dealers in voicing their issues," Wang said.

Earlier this month, premium carmakers BMW and Jaguar Land Rover voiced greater support for their Chinese dealers after a series of meetings. Reports said financial incentives are being discussed.