China Car Dealerships Struggle as Stockpiles Increase
Chinese dealers are struggling with the rising number of unsold cars that’s threatening to deepen price cuts, according to the nation’s biggest automobile dealers’ association.
Dealerships for Honda Motor Co. (7267), Chery Automobile Co., BYD Co. (002594) and Geely (175) Automobile Holdings Ltd. carried more than 45 days of inventory as of the end of April, exceeding the threshold that foreshadows debilitating price cuts, Su Hui, vice president of the auto market division at the state-backed China Automobile Dealers Association, said in an interview yesterday.
“Unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west,” Su said in a phone interview yesterday from Beijing. “It’s like a contagious disease that will spread.”
The warning signals that vehicle deliveries reported by companies, which have risen more than analysts’ estimates for the past two months, aren’t fully translating to consumer sales. Demand was the slowest in the first four months since 1998, weighing on automakers from to Volkswagen AG (VOW), which are counting on the world’s largest auto market to offset slumping sales in Europe.
wistv.com - Columbia, South Carolina |Consumer Affairs: Dealerships not ...
Consumer Affairs officials say the guide is the first ever of its kind and it comes in response to the discovery that some dealerships were not following certain state and federal laws.
"Our investigators go out and look at automobile dealerships to make sure that they're complying with the law that our agency enforces, and we were starting to see that there were more violations then we would like that we're going on, " said Carri Grube Lybarker with the Department of Consumer Affairs.
Lybarker says one of the violations included dealers not completing the "closing fee filing requirement". A closing fee is typically tacked on at the end of a sale at any dealership, but it is not something that a dealer has to charge. However, if a dealer does charge the fee, they are supposed to post it somewhere at the dealership and also file it with the SCDCA Office.
According to Lybarker, Closing fees are posted on the Consumer Affairs website to help potential buyers do some comparison shopping right in front of their computer screen. "It gives [a consumer] some room possibly to negotiate when they go to purchase the vehicle," said Lybarker. "If they see that the dealer that they are wanting to purchase the vehicle from is charging a $500 closing fee, but the dealer down the street is only charging $200, the consumer can use that information to try and negotiate that price down."
Since the beginning of the economic downturn three years ago, the state has lost 8000 dealership jobs and seen the number of auto franchises overall decline and more »
