(Yicai) Aug. 22 -- More than half of China's car dealerships were operating at a loss in the first half of the year, mainly because of struggles brought about by the price war in the Chinese automotive industry.

Some 50.8 percent of car dealers in China reported losses in the six months ended June 30, up 7.3 percent from a year earlier, according to data released yesterday by the China Automobile Dealers Association. Only 35.4 percent of them were profitable.

"Retail prices are much lower than wholesale prices, indicating a severe price inversion," said Lang Xuehong, deputy secretary-general of the CADA. Especially since the second quarter, car manufacturers and dealers have been mired in a fierce price war that continuously eroded prices, he added.  

"Under the severe price inversion, some automakers have provided rebates to dealers since the second half, such as issuing subsidies in advance without setting sales targets," Lang noted. "This has somewhat alleviated the financial pressure and losses of dealers."

Without the upfront rebates, the actual operating conditions of the dealers would have been much worse, Lang pointed out.

Only 28.8 percent of Chinese car dealerships achieved their semiannual sales target, but by sacrificing profits to increase sales, the CADA report also showed. One-third of them did not reach 70 percent of their targets.

Dealers of overseas luxury brands have performed better in the first half, as more than 40 percent of them hit their sales goals. Meanwhile, joint venture automakers performed worse than the average, as only 20.8 percent achieved their sales targets.

Editor: Futura Costaglione