Car dealers face tight inventory pressure
Six-Degree-of-Freedom Platform Suzhou Johnson Automation Technology Co., Ltd. , https://www.cn-johnson.com
October 04 11:09:15, 2025
In response to rising inventory levels and weak market demand, automakers are now employing various strategies to stimulate sales. Recently, an auto dealer disclosed to reporters that over 100 vehicles are currently sitting on the company's lot, representing the equivalent of six months' worth of sales. With increasing production capacity and a declining market, many domestic manufacturers and distributors have felt the pressure to meet year-end targets before the fourth quarter.
Price reductions have become a hot topic in the recent automotive market. Starting from August 20th, more than 20 domestic car models have successively cut their prices. Unlike past trends, this time, there were no shortages of original models for price cuts. For example, the mid-to-high-grade Passat used to require long waiting periods for purchase at the start of the year. However, just 10 days ago, the price of the Passat was reduced by 20,000 yuan under the leadership of the distributor.
Similarly, Toyota’s domestically produced cars, such as the Vios, which once saw long queues of buyers, are now struggling to sell. Last year, the Vios was known for long wait times, but starting September 1st, Toyota publicly announced price cuts of 5,000 yuan for its two major models: Corolla and Vios. After multiple rounds of price reductions, mainstream economy cars have dropped below 60,000 yuan, mid-range cars hover around 100,000 yuan, and mid-to-high-end cars have approached 200,000 yuan.
“We’ve noticed that price cuts may not be enough to revitalize the auto market; instead, they might encourage consumers to hold off on purchases,†one industry insider noted. In April, after a round of price cuts, the auto market remained sluggish, leaving dealers puzzled. Beginning in September, alongside direct price cuts, disguised tactics such as incentives and buyback programs have become more common.
For instance, Dongfeng Citroen recently offered consumers up to 500,000 yuan in third-party liability insurance, effectively worth about 1,000 yuan per vehicle. General Union Yongda also announced that it would buy back used cars at 65% of the current transaction price after three years. These measures reflect the growing pressure on dealers to clear out current inventory before the end of the year, especially since many manufacturers still carry overstock from previous years.
Midway through the year, some employees of Shanghai Volkswagen started selling concessionary cars directly to the market, offering discounts of up to 20%. This led many consumers to turn to the underground market for deals. An auto dealer shared with reporters, “I recently helped a Volkswagen employee sell a Polo. The next customer had a foreign license. These vehicles were from 2003, but they’re being sold for around 80,000 yuan.â€
With more inventory to manage, domestic dealers are under increasing pressure. Recent data from the SASAC shows that 13 key state-owned automotive enterprises, including FAW Group, SAIC Group, and Dongfeng Group, achieved a total industrial output value of 242.34 billion yuan from January to July. Production growth slowed by 2.4% compared to the first half of the year, while sales growth dropped by 5.6%. As a result, the production and sales ratio for these 13 companies reached only 6.5%, down 3.7 percentage points year-on-year.
Notably, although domestic auto production and sales maintained a growth trend in the first seven months, sales growth in July fell to 1.35%, the lowest in two years. With production far outpacing sales, inventory continues to grow, signaling ongoing challenges for the industry.