At the end of last year, a number of Beijing Hyundai dealerships in Shanghai requested to leave the joint venture’s sales network after suffering severe losses. A similar phenomenon has occurred among Renault dealerships in the city, which have made similar requests. Such events are becoming more and more commonplace across the entire market.
According to statistics from the China Association of Automobile Manufacturers, both production and sales volumes decreased year-on-year in June. Cumulative sales for the first six months of the year increased a mere 1.4%. This lag in sales growth has seriously harmed the prospects of many dealerships in the country. Despite a plea from a conference of the China Auto Dealers Chamber of Commerce for dealerships to work together with manufacturers to help improve the performance of the market, many have still chosen to leave the industry in order to prevent further losses.
This problem is further compounded by the lack of assistance dealerships receive from their respective manufacturers. A recent survey revealed that only 9.09% of manufacturers are willing to offer financial assistance and support to help improve the growth of dealerships. This overly conservative attitude has caused a large amount of conflict between manufacturers and dealerships.
Dealerships have also complained that manufacturers refuse to communicate with them regarding problems, further preventing improvements of the supply chain. Dealerships have also pointed out that manufacturers refuse to cooperate with them when setting up production and sales targets, instead choosing to focus on solely maximizing their own interests. Lack of communication has prevent dealerships from keeping their inventory levels within in healthy limits.
In spite of these hardships, representatives from the China Auto Dealers Chamber of Commerce have encouraged dealerships to remain positive, stating that current difficulties are only temporary and that hardships can be overcome with positive cooperation between all parties.
