So sayeth Bloomberg:
Chinese dealers are struggling with the rising number of unsold cars thatâ€™s threatening to deepen price cuts, according to the nationâ€™s biggest automobile dealersâ€™ 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.
â€œUnsold cars are crowding dealer lots in cities from Guangzhou in the south to Xiâ€™an to the west,â€ Su said in a phone interview yesterday from Beijing. â€œItâ€™s like a contagious disease that will spread.â€
The warning signals that vehicle deliveries reported by companies, which have risen more than analystsâ€™ estimates for the past two months, arenâ€™t fully translating to consumer sales. Demand was the slowest in the first four months since 1998, weighing on automakers from General Motors Co. (GM) to Volkswagen AG (VOW), which are counting on the worldâ€™s largest auto market to offset slumping sales in Europe.