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editor of every economic report: huang sheng

on september 23, the china automobile dealers association’s official microblog said that in recent times, the association has received feedback from a large number of member companies.the drastic changes in the automobile market brought about by factors such as the ongoing "price war" have left automobile dealers in a quagmire, facing the prominent problem of extremely tight liquidity.the association immediately launched extensive research and analysis to reflect as comprehensively as possible the current financial difficulties and closure risks faced by automobile dealers.

recently, the association has also formally submitted an "emergency report on the current financial difficulties and closure risks faced by automobile dealers" to the relevant government departments.

the report states:currently, auto dealers are experiencing widespread losses in new car sales, and are generally operating with cash flow deficits and increasing risks of capital chain ruptures, making it difficult for them to escape their survival difficulties.

there are two main problems we are facing at this stage:

first,the dual pressures of sluggish consumption and factory wholesale volume have kept dealers’ inventories at high levels. in order to reduce capital pressure and financing costs, dealers are forced to sell at low prices to survive;

second,the "price war" has caused a serious inversion between purchase and sales.the more dealers sell, the more they lose. at the same time, they face the pressure of difficulty in fulfilling their financing obligations when they mature. dealers are facing a cut-off in operating cash flow and a sharp increase in the risk of a broken capital chain.currently, the time it takes for dealers to maintain their existing working capital has been compressed to its limit.

according to the association's "market pulse" monitoring data, as of august this year, the highest dealer sales gap has reached -22.8%, a further increase of 10.7 percentage points from the same period last year. according to the association's experts' analysis of relevant data, in august, the overall discount rate of the new car market was 17.4%.from january to august this year, the "price war" has caused a cumulative loss of 138 billion yuan in the overall retail sales of the new car market, which has had a significant impact on the healthy development of the industry.

the association calls on relevant government departments to pay close attention to the current financial difficulties and closure risks faced by the automobile dealership sector, and to decisively adopt phased financial relief policy measures to effectively prevent the automobile dealership sector fromsystemic riskoccurs.

the price war in the automobile market can be traced back to 2023. at the beginning of 2023,teslathe shocking price cut of the first car, up to 48,000 yuan, was the first to sound the clarion call for this battle. subsequently, many car companies responded one after another, and the price war intensified.

according to the china passenger car association, in the first seven months of this year, the cumulative sales of new energy vehicles reached nearly 4.99 million, a year-on-year increase of 33.7%, compared with 36.2% in the same period last year, an increase of more than 90% in 2022 and more than 160% in 2021. it is also worth noting that the growth of new energy vehicles in china this year mainly depends on plug-in hybrid vehicles, which increased by 71.6% year-on-year to 2.08 million vehicles, while pure electric vehicles increased by only 15.5% year-on-year.

according to the china passenger car association, domestic retail sales of new energy passenger vehicles reached 1.027 million units in august, a year-on-year increase of 43.2%. the domestic retail penetration rate of new energy vehicles was 53.9% in august. from january to august 2024, the retail sales of new energy passenger vehicles reached 6.016 million units, a year-on-year increase of 35.3%.

what is more significant than the slowdown in sales growth is the price reduction of new energy vehicles. this year, the price war of new energy vehicles has intensified.

according to the data provided by lv jinghong, smart travel analyst at bloomberg new energy finance,the average price reduction of domestic new energy vehicles has increased from 6,700 yuan in the first quarter of last year to 16,000 yuan in the first quarter of this year.this also resulted in the weighted average selling price of new energy vehicles in the first quarter of this year being almost the same as that of traditional fuel vehicles. two-thirds of new energy vehicles on the market are already priced lower than similar fuel vehicles.

daily economic news, compiled from china automobile dealers association official account, china business news, and public information