More China car dealers quit last year after losses, group says

[BEIJING] More auto dealerships in China quit their sales networks last year after profitability deteriorated, according to a trade group's survey.

The China Auto Dealers Chamber of Commerce also found that dealers of Honda Motor Co's premium Acura brand were the least satisfied, while Volkswagen AG's Audi ranked first. The number of vehicles sold at a loss rose, according to the group, which didn't disclose details of its survey.

The decline in profitability among dealers "not only threatens the survival and development of auto distributors, but more importantly affects the prospects of the auto manufacturing industry and ultimately the interests of consumers," the trade group said in a statement accompanying the survey today.

Dealerships in China have asked for financial support and lower sales targets from manufacturers after a combination of rapid expansion of sales networks and over-reliance on new- vehicle sales in the face of increasing restrictions by cities hurt profits.

Volkswagen, the biggest foreign carmaker in China, reached an agreement with its dealers of imported models, the carmaker said today in an e-mailed statement. The company will continue to set reasonable sales targets as part of its strategy to ensure a financially sound distribution network, according to the statement.

BLOOMBERG