Gasgoo.com (Shanghai July 24) - Despite predictions that the Chinese automotive market will make a turn for the better this year, increasing competition between an ever greater number of dealerships has raised many concerns among industry analysts. According to a report appearing on chinanews.com earlier this week, the number of automobile dealerships in the country has already exceeded 20,000 in 2012.
In order to increase their respective market shares, automobile enterprises have announced several new expansion plans for their production facilities and sales networks in China. Profit margins for individual dealerships are expected to shrink even further as competition in the market becomes fiercer. Yayuncun Automobile Trade Market General Manager Chi Yifeng commented that dealerships have increasingly been put under pressure to make sales as their profits continue to contract.
Another issue of concern are the increasing size of dealership inventories. According to a recent study done by the China Automobile Dealers Association (CADA), the average inventory index rating for Chinese dealerships reached 1.58 points this May. Despite the fact that that figure is 0.3 points than last May's index rating and 0.1 points less than this April's rating, it is still above the internationally-recognized warning level of 1.5 points. CADA Deputy Secretary General Luo Lei predicts inventory pressure to increase even more over the next few months.
