65 automakers have inventories of 400,000 units

Shanghai, November 5 (Gasgoo.com) Inventories of unsold new vehicles made by 65 major automakers in China hit a four-year high to 395,647 units for the month of August, the latest data from China Automobile Dealers Association (CADA) showed, according to Stockstar report on Monday.

Of all the vehicles stocked, 255,904 units were sedans, accounting for 64.48% of the total. The percentage also went up 7.32% compared with the previous month.

Joint-venture automakers like Changan Ford, Beijing Hyundai, Shanghai GM and FAW VW all reported vehicle inventories of 10,000 units, the report said.

Analysts say that in a background of slowing growth in the world's second-largest auto market, vehicles manufacturers have to rely on output reduction and price-cut to slash the stockpile, which may further squeeze their already thin profit margins.

Among others, Volkswagen and Ford's respective joint ventures in China have cut the prices of some of their models sold in the market earlier last month.

FAW-VW has announced price cuts of 10,000 yuan ($1,463) and 19,000 yuan on its mainstream models including Bora, Golf, Sagitar, and Magotan to spur demand, while Chang'an Ford Mazda announced last Wednesday to slice the price of its Mondeo mid-to high-class sedan by up to 20,000 yuan, or 12 percent.

Mazda Motor, partly owned by Ford Motor Co, is reducing production of the Mazda3/Axela and the Mazda2/Demio at its two China plants by a combined total of slightly more than 5,000 units, over a two-month period to September.

Mazda's current inventories are around three months' sales and the output reduction should bring them back to a healthy level, the company said.

PSA Dongfeng Peugeot Citroen Automobile Co, a joint venture between Dongfeng Motor Corp and PSA Peugeot Citroen, announced last week it plans to lay off more than 1,000 employees starting November because of the mounting vehicle inventory as the market demand is sliding.