Car sales in China have, for much of the auto industry, helped companies weather the global economy’s struggles over the last couple years, but that demand boom might be over.
Many dealerships in Guangzhou are holding inventory for more than 45 days, which is the point at which they would consider dropping prices. That could spell bad news for automakers because the manufacturing process is slow to react, meaning there will be even more cars piling up that aren’t likely to sell quickly.
Chinese demand for cars was the slowest this quarter that is has been since 1998. Historically, that wouldn’t have been such a problem, but the world’s largest automakers could suffer as a result because Chinese demand has, until now, been filling the gap left by European financial turmoil.
Moving forward, a continued slowdown effect could cause problems for other markets, like the U.S. where car sales have been recovering.
[Source: China Car Times]