December 23, 2024

·Inventory rose, profit fell, car circulation stepped into “micro growth”

Selling cars is getting less and less money, and even selling luxury cars has joined the loss camp. A sales manager of a German joint venture brand in Beijing said bluntly: "Can it be cheaper? This is a question that every buyer who I contacted must ask." Then he said indignantly, "I am really inferior." Selling urns, people who buy that are not priced."

The Automobile Dealer Inventory Warning Index issued by the China Automobile Dealers Association in May 2014 was 49.3%, which was another 3 percentage points higher than that in April, close to the 50% warning line. This means that the domestic dealers' operating conditions are generally average, with a slight decline from last month.

The China Automobile Circulation Association covers more than 1,000 4S stores in most provinces across the country, covering 55 car brands. In the industry, the production and sales statistics of the China Association of Automobile Manufacturers belong to industrial statistics, that is, car manufacturers only sell their cars to dealers, even if they achieve sales. The principle of commercial inventory statistics of the China Automobile Dealers Association is to calculate the vehicles that have not been sold to consumers after the factory sells them to dealers. The general international standard is to add industrial inventory and commercial inventory together, and the reasonable amount is between 30-45 days of sales. Due to China's vast territory and long transportation cycle, some dealers' commercial inventories are also normal for two months.

Various data show that since 2011, China's automobile circulation industry has begun to slow down in an all-round way and gradually entered the era of “micro-growth”. Deloitte's 2013 Deloitte China Auto Dealer Risk Status Research Report pointed out that the net profit margin (return on sales) of Chinese auto dealers remained below 2%, below the industry standard of 3%.

The vicious circle of “sleasing sales – pressure storage – price reduction” comes from the lack of market in the downstream of dealers, and their upstream producers are actually difficult to get rid of. "The pressure warehouse is the source of all evils, especially luxury cars. Pressing one car means hundreds of thousands of dollars and millions of dollars of funds are being used." A general manager of a Japanese dealer hates to say that many dealers’ CEOs A capacity expansion will be fearful. "Inventory comes up, whether it is selling or holding, it is undoubtedly the two choices to find death and wait for death." The dealer manager is very helpless.

The capacity expansion has been aggressive, and the market performance growth has continued to slow down, resulting in excessive inventory in the automotive industry. An objective fact is that sales have been significantly suppressed in first-tier cities where purchasing power and consumers are more mature due to the implementation of purchase restrictions. Despite the huge consumer demand in the second and third tier cities, there is a lack of excellent management and technical personnel.

KPMG's survey predicts that by 2016, China's idle capacity will rise to 9 million. "The price cuts are every year, and this year is particularly fierce." This is really a phenomenon that every car practitioner does not want to see. (

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