The China Automobile Dealers Association announced that it has recently received a large number of member companies reporting the severe changes in the automotive market caused by factors such as the ongoing 'price war', leading to car dealers facing the urgent problem of extremely tight liquidity. The association recently submitted an 'Urgent Report on the Current Financial Difficulties and Shutdown Risks Faced by Automotive Dealers' to the relevant government departments, analyzing the issue of the sharp increase in shutdown risks due to the strained financial chain faced by automotive dealers and providing relevant policy recommendations.

The 'Report' points out that current automotive dealers are experiencing widespread losses in new car sales, with general situations of operating in cash flow deficits and intensifying risks of financial chain ruptures, making it difficult to escape the survival dilemma. The two main issues faced at the current stage are: first, the dual pressure of weak consumption and high manufacturer wholesale volume has led dealers to maintain high inventories, forcing them to sell at low prices to reduce financial pressure and financing costs for survival; second, the 'price war' has significantly reversed the buying and selling relationship, the more dealers sell, the more they lose, while also facing pressure on financing maturity obligations, leading to dealers experiencing a flow cut in operations, with a sudden increase in the risk of financial chain ruptures. Currently, the existing liquid funds of dealers have been compressed to the limit.

According to the Association's 'Market Pulse' monitoring data, as of August this year, the data of the reverse trading ratio of dealers has reached a high of -22.8%, further expanding by 10.7 percentage points compared to the same period last year. According to the analysis of relevant data by the Association's experts, the overall discount rate in the new car market in August was 17.4%, and the 'price war' has caused a total retail loss of 138 billion yuan in the new car market in the first eight months of this year, impacting the industry's healthy development to a great extent.

The Association believes that the current automobile market has entered a stock market stage, where circulation efficiency has become an important aspect of improving the overall operational efficiency of the national economy. The automobile circulation industry belongs to a capital-intensive industry with a high proportion of private enterprises. Financial stability promotes circulation activity. Further improving the financial services' capability to ensure circulation, especially increasing financial support for the development of private dealership enterprises, is of significant importance for expanding automobile consumption, upgrading the automobile industry, and constructing a new development pattern of 'dual circulation'.

The Association urges relevant government departments to pay close attention to the financial difficulties and shutdown risks faced by automotive dealers, and decisively take phased financial relief policy measures to effectively prevent the occurrence of systematic risks in the automotive dealership sector. The relevant departments should promptly study and introduce phased financial relief policy measures for the automotive dealership sector, including organizing a special survey on the financial environment in the automotive dealership sector as soon as possible, sorting out the financial needs of the top 100 automotive dealership groups, regional leading dealership groups, and small and medium-sized automotive dealers, and researching and formulating financing support policies for the automotive dealership sector. Encourage financial institutions to increase their support for the automotive dealership sector under the precondition of legal compliance and controllable risks, in order to further enhance the financial service circulation function; financial institutions and automotive dealers collaborate to stabilize the automotive market, allowing for flexible extension and renewal of existing loans without pulling back loans, discontinuing loans, or pressuring loans. Gradually increase credit limits for dealers and expand the scope of loan use. Encourage policy banks to establish special credit policies for automotive dealers.