Foreign automakers face supply glut
Foreign automakers in China may struggle to dictate sales targets in the future after dealers complained to the government that inflexible targets set during a market boom obliged them to buy too much stock and bear the brunt of a drop in demand.
Automakers largely stuck to targets throughout 2014, selling cars to dealers on schedule. But dealers slashed retail prices and booked losses as sales growth in the world’s biggest auto market halved from the previous percent.
“Carmakers have high market expectations. But the reality is: supply exceeds demand,” said Luo Lei, deputy secretarygeneral of the China Automobile Dealers Association.
The report from China’s biggest dealer body could help change the balance of power at a time when automakers are starting to alter expectations in an economy growing near its slowest rate in 24 years.