Thanks to an economic boom lasting for approximately two decades, China grew from having only about 1 million cars in the country during the 1970's to more than 100 million cars today.
In fact, the global auto industry has become increasingly dependent towards China's growth. However, LeftLaneNews reported that sales are now slowing and the days of the double-digit sales gains seem to have evaporated.
Currently, according to the China Automobile Dealers Association, auto dealerships are holding onto inventory equalling a 60-day vehicle supply. This is a steep indication of slowing demand, as data recorded during the end of April only displayed a 45-day average.
An exercise in damage limitation, dealers are slashing prices and offering whatever incentive they can to get their inventory flowing again. As losses mount, dealers will face problems achieving mandatory sales targets for automakers, a part of the franchise agreements in China.
Anxious and troubled, China Automobile Dealers Association deputy secretary general Luo Lei told Bloomberg, "Dealers can't shoulder the burden anymore. Their backs are broken."
This past May, General Motors and various car companies still posted record sales in China, contradicting this report. However, a loophole should be noted that automakers only count its sales distributed to dealerships, not to customers.
