The China Automobile Dealers Association stated in a statement yesterday (24th) that automotive dealers face the issue of a broken capital chain due to continuous price wars, and has submitted an emergency report to the government, analyzing the above issue and providing relevant policy recommendations.

The association pointed out that dealers are currently facing two major problems. One is the sluggish consumer demand and high inventory levels due to manufacturers' wholesale volumes, forcing dealers to lower prices to reduce pressure and financing costs. The second problem is that price wars lead to dealer sales and losses being directly proportional, coupled with the pressure of financing maturity, increasing the risk of a broken capital chain.

Industry data shows that mainland automobile dealers recorded a loss of 13.8 billion yuan in the first eight months of this year. In August, the overall discount rate in the new car market was 17.4%. As of August this year, the highest sales deficit has reached -22.8%, expanding by 10.7 percentage points year-on-year.