(Yicai) Nov. 12 -- Singapore’s German Automobile International could have to shut all nine of its BMW dealerships in China, following the closure of a BMW 5S store last month, due to a severe liquidity crisis, a former staff member told Yicai.

GA’s BMW dealerships in the country have not paid staff salaries for two to three months and are being forced to delay new car deliveries, a person who used to work at the dealer’s BMW 4S store in southeastern Fujian province said. “In our shop, all employees including the general manager have quit.”

GA is adjusting its Chinese business, another former staff member told Yicai. The car dealer, which is incorporated in the Cayman Islands, has sold its two Porsche 4S stores and the nine BMW outlets are likely to be shuttered, he added.

GA used to be one of BMW’s top five dealers in China. But in September, Munich-based BMW terminated its agreement with the company, citing poor management decisions that led to the insolvency. This resulted in the closure of BMW’s first 5S store, which offers second-hand car sales on top of the normal 4S dealer services, in Beijing last month.

GA has yet to make a public statement regarding the shuttering of its BMW dealerships.

The closure of GA's BMW 4S stores in China epitomizes the difficulties that Chinese dealers of luxury cars are facing, as the rising popularity of local new energy vehicle brands changes the market landscape.

“Only two Defender and Range Rover models in our store are still profitable,” a Jaguar Land Rover dealer in south China told Yicai. “We are losing money on the sale of every other type of auto, sometimes up to CNY100,000 (USD13,828) per car.”

BMW’s heyday in China is over, said a person in charge of a Guangzhou-based dealer for a luxury brand. Before, customers had to pay a premium for a luxury car from first-tier brands such as BMW, Mercedes-Benz and Porsche. But now, discounts are a must. And even with the price cuts, sales are still plummeting.

This year, the discount on some BMW models even topped CNY100,000 (USD13,800) per car, he said. Audi's A6L had the highest discount at 30 percent, and many models from other high-end marques such as Porsche and Land Rover also had substantial price cuts.

But despite these price reductions, sales of foreign luxury cars continue to sink. In the first three quarters, BMW's China sales plunged 13 percent from the year before, Benz shipments tumbled 10 percent and Porsche’s by 29 percent.

Many Chinese luxury car dealers such as Rundong Group and Zhengtong Group have also been affected and are shuttering stores, postponing deliveries and missing debt repayments this year as business gets tough.

Editors: Tang Shihua, Kim Taylor