(Yicai) Sept. 25 -- The China Automobile Dealers Association issued a warning to the government about the widening losses of Chinese dealers, which reached CNY138 billion (USD19.7 billion) in the first eight months of the year.

The CADA presented an emergency report about dealers’ financial struggles and shut-down risks that were brought about by the fierce price war in the Chinese automotive industry to government agencies on Sept. 23.

Dealers are struggling with poor demand and high inventory levels, which caused them to sell cars at very discounted prices, according to the CADA. Retail prices were nearly 23 percent lower than wholesale prices in August, with new vehicles discounted by an average of 17 percent in the period.

The CADA is calling for the government to intervene and address dealers’ troubles by issuing temporary relief measures. Meanwhile, the association advised dealers to accurately evaluate market demand and promote trade-in and scrapping programs to help rebuild consumer confidence and mitigate operational risks.

Since 2020, over 8,000 sales, spare parts, service, and survey auto dealerships have shut down in China, with more than 2,000 expected to close this year alone. In the first half of last year, only 27 percent of the 4S stores in the country were profitable, compared with over 50 percent in the same period of 2021.

Editor: Futura Costaglione