Recently, there have been reports that due to poor sales and loss-making car sales in mainland China, some Porsche dealers in China have launched a boycott.

According to a report by Daiwa, the new car profit margins of Chinese deluxe car dealers have dropped to a level where dealers refuse to accept more inventory unless manufacturers provide additional rebates. For dealers, this resistance indicates that the new car business is reaching its bottom; however, for German car manufacturers, reducing supply or providing additional rebates will still lead to a decline in profits.

Regarding the impact on auto dealers, Zhongsheng Hldg, Yongda Auto and Meidong Auto have seen their stock prices fall by 23% to 44% since the beginning of the year, as discount pressures continue to grow. During the same period, the Hang Seng Index rose 10%. The bank believes that the boycott shows that new car business is hitting bottom for dealers. Since the thin profit margins of new cars are mainly reflected in the price, any additional subsidies from automakers in the short term will bring profit growth to dealers. However, sustainable profit recovery still depends on improvements in the macro economy and consumer sentiment.