Inventory backlog takes heavy toll as passenger car sales slow down
By Lu Nengneng |
August 9, 2012, Thursday
|
Print Edition
Print Edition
GROWTH of China's passenger car sales slowed down for a third month as dealerships struggled to clear the inventory backlog to keep pace with carmakers' manufacturing activity.
Deliveries of sedans, sport-utility vehicles, multi-purpose vehicles and minivans totaled 1.04 million units in July, advancing at an eased pace of 8 percent compared with 12.4 percent in June, the China Passenger Car Association said yesterday.
The production of cars rose 12.8 percent in July to 1.17 million units, with this year's cumulative supply surplus rising to 670,383 units from 532,609 units by June.
"Mounting inventory pressure, coupled with draining cash flow, has undermined dealerships' initiatives to add more stock," the association said.
The combined sales in the past seven months grew 5.8 percent from the same period of last year to 8.05 million units, improving from an increase of 5.6 percent in the first six months of this year.
"With growth in cumulative car sales picking up, carmakers' expectations on market demand are growing higher and pushing the inventory level of dealers through the roof," the association said.
According to a study released by the China Automobile Dealership Association last week, up to 10 car brands, including five domestic ones, saw the ratio of their monthly inventories versus sales surpass the "danger-level" benchmark of 2.5 at the end of June. The association has urged carmakers to pay close attention to cash-strapped and overstocked stores and provide them with financing support if necessary after some of them threatened to shut down earlier this year in response to pressing sales tasks.
Deliveries of sedans, sport-utility vehicles, multi-purpose vehicles and minivans totaled 1.04 million units in July, advancing at an eased pace of 8 percent compared with 12.4 percent in June, the China Passenger Car Association said yesterday.
The production of cars rose 12.8 percent in July to 1.17 million units, with this year's cumulative supply surplus rising to 670,383 units from 532,609 units by June.
"Mounting inventory pressure, coupled with draining cash flow, has undermined dealerships' initiatives to add more stock," the association said.
The combined sales in the past seven months grew 5.8 percent from the same period of last year to 8.05 million units, improving from an increase of 5.6 percent in the first six months of this year.
"With growth in cumulative car sales picking up, carmakers' expectations on market demand are growing higher and pushing the inventory level of dealers through the roof," the association said.
According to a study released by the China Automobile Dealership Association last week, up to 10 car brands, including five domestic ones, saw the ratio of their monthly inventories versus sales surpass the "danger-level" benchmark of 2.5 at the end of June. The association has urged carmakers to pay close attention to cash-strapped and overstocked stores and provide them with financing support if necessary after some of them threatened to shut down earlier this year in response to pressing sales tasks.
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