The auto industry in China has been booming the last few years and automakers have been opening up more and more factories to cater to the demand, but it looks like despite the orders they have been receiving, the dealers seem to be having problems actually selling off the vehicles to the consumers. Some reported that dealers now have too many cars in stock and can’t seem to be able to sell them off.
Toyota is reported to be one of the manufacturers heavily affected by this. Bloomberg reported that at least 10% of the Toyota dealers will have to close down or stop selling Toyota vehicles because the cars are just not selling. Bloomberg also reported that about 95% of showrooms are not making any money.
The main problem is the oversupply of Toyota vehicles and since the dealers are not able to sell them off, they are left with cars and will most often give a discount to get customers to buy them. Not being able to meet the sales target is also one of the problems the dealers are facing.
Dealers in China are now requesting that Toyota lower down the sales target by 6% and to also pay $355million for the extra inventory cost.