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Luxury Car Dealers Squeezed by Slower Sales, Service Scandals

By An Limin and Han Wei / May 08, 2019 02:55 AM / Business & Tech

Photo: IC Photo

Photo: IC Photo

Inventories of Chinese luxury car dealers are rising as sales slow, putting more pressure on profitability.

An index tracking luxury car inventories rose 9.1 percentage points in April from the previous month, according to the China Automobile Dealers Association (CADA). Sales of luxury brands are partly affected by a high-profile dispute involving a Mercedes-Benz dealership and a local customer over suspicious charges and after-sales service, the association said.

The April dispute in Xi’an, which went viral on the internet, put services of luxury car dealerships under a spotlight and sparked a series of complaints involving dealerships across the country.

An auto company executive said that as auto dealers compete fiercely by cutting vehicle prices, some dealers charged customers various extra fees to maintain profits.

Auto dealers are feeling the pinch as auto sales slow in China. In 2018, about 39% of China’s 29,000 licensed auto dealers reported losses, the most in seven years.

Related: Mercedes-Benz Scandal Shines Spotlight on Suspicious Fees


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