The China Automobile Dealers Association (CADA) filed an emergency report on Sept. 23, reporting 138 billion yuan ($19.55 billion) in losses in the first eight months of 2024.
Car dealers were forced to sell new cars at steep discounts, and the August discount rate stands at 17.4 percent.
The association warned authorities that car dealerships now face shutdowns and called for more financial support. In a statement on CADA’s WeChat account, it said that inventories are high while consumption is low, resulting in discounted sell-offs of new cars.
CADA blamed “capital chain rupture” for the disruption to the industry, not operational issues. The car dealership industry is just the latest in China to be hit by cash flow issues.
Car sales in China fell for five straight months, from April to August, though electric and hybrid vehicle sales rose due to subsidies and trade-in deals.
China Grand Automotive Services, China’s second-largest car dealership, was removed from the Shanghai stock exchange last month after its stock traded at less than face value for 20 consecutive days.
Other countries are putting up guardrails against China’s auto oversupply crisis.
On Sept. 23, White House economic adviser Lael Brainard said safeguards were needed against China’s auto trade practices.
“China is flooding global markets with a wave of auto exports on the back of their own overcapacity,” Brainard said at the Detroit Economic Club. “We saw a similar playbook in the China shock of the early 2000s that harmed our manufacturing communities, and this administration is determined we will not see a second China shock.”
“We’re going to need to work with our partners Canada and Mexico to address China’s overcapacity in the EVs,” Brainard said, referring to a review of the U.S.–Mexico–Canada trade agreement for 2026.
She said U.S. officials are already in talks with Mexican officials, and they share concerns about China using Mexico as a platform to ship into the United States at artificially low prices.
