Channel Stuffing Breaks Dealers' Backs In China. In America, The Picture Is Even Worse
China’s car dealers’ “backs are broken,” Luo Lei, deputy secretary general of the C hina Automobile Dealers Association told Bloomberg. “Dealers can’t shoulder the burden anymore.” They are overstuffed with cars. Average inventory at Chinese dealerships stands at more than two months of sales at the end of May up from a 45 day inventory by the end of April. It could be worse: In America, inventories are way ahead of China.
At 45 days, dealers in China already struggled with the rising number of unsold cars. Now, they are ringing the alarm bells. “The worsening glut of vehicles across the nation’s dealerships is unsustainable,” Bloomberg writes.
But how does this jibe with the great sales data published by General Motors for instance? A few days ago, GM China announced a surprising 21.3 percent increase for May, with Wuling up an even more baffling 35.9 percent.
Bloomberg says that these numbers are in stark contrast with rising dealer inventories. Carmakers, says Bloomberg, “only disclose the number of vehicles sold to Chinese dealers — instead of consumers.”
Dealer representative Luo Lei disagrees with the rosy numbers:
“The picture we have is very different from what the automakers are painting. The sales increases they’re reporting are achieved by loading dealers with stock.”
Average Days To Turn
Meanwhile at home, the channel is being stuffed with greater vigor than in broken back China. GM’s and Chrysler Groups inventories stood at 70 days in April, Edmunds reports. Ford is a little more conservative with only 60 days.
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