Chinese Dealers Drowning In Cars! Gasp! 60 Days Of Inventory!

Bertel Schmitt
by Bertel Schmitt
chinese dealers drowning in cars gasp 60 days of inventory

The New York Times carries a long story today that chronicles changes in the Chinese car market. Written by Reuters automotive specialists Norihiko Shirouzu and Fang Yan, it is a story of China where you now get a discount and instant delivery for a BMW instead of having the option to pay 20 percent more, or wait a few month for delivery.

The car market in China, says the article, is becoming more like that in the United States, where most of the money is made in financing, insurance and maintenance. Indeed it is.

What seems to be shocking to a Chinese dealer will sound quite familiar to his American counterpart. Says the New York Times:

“BMW dealerships in Guangdong Province, an export hub in southern China that has been hurt by the euro zone debt crisis, have as much as 90 days’ worth of stock, more than double normal, and the 5-series now carries a discount of 25,000 renminbi, or $3,900 — 5 percent of list price, dealers say.”

Reuters found one case where a Mercedes Dealership had to offer a nearly 30 percent discount to move a S-Class 300 sedan. European dealers will be jealous. There, we learned that 30 percent are considered normal for bread and butter cars of Fiat and Opel.

Rajeev Chaba, a senior sales and marketing executive in Shanghai for GM, said average inventory levels for the industry had ballooned to 60 to 75 days, up from the 30 to 45 days generally seen as desirable, and that GM‘s inventory levels are below the industry average.

As TTAC readers discussed yesterday, 60 days of inventory are considered desirable in America. The few GM executives who are not in China yet would love to. Especially GM’s American pick-up inventory, hovering at double Chinese levels of 120 days, is troubling.

Some people tend to explain it with the big model change, some people say it is silly to pile up huge previous-gen inventories before a model change. Some people say it’s criminal, and filed a class action suit. That’s something else that has yet to come to China.

However, here is something else the Chinese can learn from the Americans: Say it’s all part of the big plan, and the inventory has been built up to avoid future shortages. Reuters reports today that the China Association of Automobile Manufactures (CAAM) expects passenger car sales to rise 11.1 percent this year, picking up in the second half from a slower first.

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  • Yeahbeer Yeahbeer on Jul 26, 2012

    Wow looks like some big discounts are coming buyers ways.

  • Ron B. Ron B. on Jul 26, 2012

    Pity the wheel is on the wrong side, I could buy a nice merc and get it sent to OZ at those prices and make money on the thing.

  • Inside Looking Out The next 4Runner will be BEV.
  • The Oracle This is a proper Italian red sauce turd.
  • Carson D This isn't a notice of a wait time for 4Runner fans. This is a deadline for the opportunity to buy one new before they're gone. Whatever comes next, there is no possible way that it will be as good at doing 4Runner things as what is available today.
  • Bkojote There's a lot "just right" with the current 4Runner, and having spent time in more contemporary equivalents for road trips, I completely understand why they sell a ton of these.Here's some topics that aren't super common among 4runner owners - excessive carbon buildup in the engine after 40,000 miles (Audi/VW), bent valves (Bronco) , failed oil coolers (Jeep), cracked engine blocks (Jeep), dead vehicles from OTA updates (Chevy Colorado), being stranded due to opening the door too many times (Defender), malfunctioning engine sensors (Defender, VW), dead batteries due to electrical system malfunctions (Jeep), unusable defoggers (Jeep), waiting for seat heaters to boot up (Subaru), randomly catching fire (Kia/Hyundai), crappy build quality (Ford, Tesla).The interior feels solid and rattle free, and everything feels substantial in the way a Jeep Grand Cherokee or Kia Telluride does not. 14 year run means accessories are plentiful and well sorted. The control inputs from the radio to heated seats to climate control work better than 99% of the cars you can buy new at this point and are dead simple and ergonomically satisfying. Even dynamically (I drove a model with the KDSS system to be fair) it is a surprisingly composed vehicle on mountain roads- it's far more civilized than a Bronco or Wrangler, and hell, it was far more pleasant than the past two peastant-grade Benz crapmobiles I've been in.So I get it- car journalist rags whine about how overly complicated and tech-heavy modern vehicles are while their substance is cost cut, but here's the literal definition of 'don't fix it if it aint broken.' . It's a trusty Ford Econoline in a world of craptastic Ram ProMasters.
  • Frank Sounds like they dont want to debut it at the same time as the new Land Cruiser, which is probably smart. The new 'runner is ready to go I am told, so there's a reason for this delay.