Automakers worldwide could be affected by slowing sales results in China as dealers see stocks of unsold cars rise, threatening price cuts.
Bloomberg reports the China Automobile Dealers Association (CADA), which covers Honda, Chery and Geely, is increasingly concerned at the possible price cuts that could result from carrying more than 45 days of inventory as of the end of April.
Vice president of the auto market division at CADA, Su Hui, told Bloomberg, “Unsold cars are crowding dealer lots in cities from Guangzhou in the south to Xi’an to the west.”
“It’s like a contagious disease that will spread.”
While companies reported vehicle deliveries have increased beyond expectation for the past two months, these figures appear not to be translating into consumer sales, with demand in the first four months of this year slowing to levels not seen since 1998.
A slowing in China, the world’s largest automotive market, could result in flow-on effects for automakers like General Motors, Volkswagen, Ford and Daimler who have already committed huge investments toward the market in attempts to stay strong in the face of poor sales across Europe.