TapTechNews October 8th news, Shen Jinjun, the president of the China Automobile Dealers Association, said in an interview with LatePost: The culprit of the price war is some OEMs that blindly produce to seize the market regardless of market demand.
According to TapTechNews report, on September 23rd, the China Automobile Dealers Association issued a document stating that the association appealed to the government departments and submitted an emergency report regarding the problem of dealer capital chain rupture caused by the price war.
Shen Jinjun said: As the automobile market enters the stage of stock competition, the manufacturers should produce according to the market demand, that is, how many orders the brand has, they should produce that much. If not in accordance with 'production determined by sales', I think it is blind production. The final result is a serious imbalance between supply and demand, but the manufacturers are not harmed at all, and the sales and inventory pressure are all转嫁 to the downstream dealers.
He believes that automotive dealers are currently struggling to survive under the dual pressure of automakers and consumers, suffering from the dilemma of a broken capital chain and a significant decline in profits.
Shen Jinjun feels that this crisis is not simply overcapacity, but that the automobile production has not yet fully shifted from a planned economy to a market economy. Automakers continue to produce according to the set goals when the demand is sluggish, pursue the scale effect, resulting in supply far exceeding demand, and thus intensifying the price war.
Shen Jinjun said: It is no longer a matter of which dealer earns less money or has less profit, but it is facing the life-and-death moment due to extremely tense capital flow caused by the price war, and it can even be said to be the darkest hour, because most dealers are losing money.