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Auto Dealers in China, Ubiquitous as KFCs, Face Shakeout

  • Three in four dealers unprofitable or just breaking even
  • Carmakers pushing too much inventory, dealer group says
General Motors Co. Cadillac CTS, left, and SRX vehicles are displayed at a dealership in Shanghai.

General Motors Co. Cadillac CTS, left, and SRX vehicles are displayed at a dealership in Shanghai.

Photographer: Tomohiro Ohsumi/Bloomberg
Updated on

China has set six straight annual records for the most new vehicles bought by any country in the 150-year history of the automobile. And yet, a troubling trend has emerged among the dealers moving all that metal -- most are just spinning their wheels.

Three-in-four dealers were either unprofitable last year or just breaking even, according to the China Automobile Dealers Association. With little sign of improvement in the economy and carmakers pushing too much inventory onto their ever-growing networks of retailers, the situation may worsen this year, said Zhu Kongyuan, secretary general of the China Auto Dealers Chamber of Commerce.