During the early eight months of 2014, the total manufacturing and sales of automobiles were 1.52 million and 1.5 million units correspondingly as reported by Chinese association for automobile manufacturers. The units for production and selling signify the annual growth of 8.61% and 7.675 respectively. However, the growth was severely dropped in the month of August that represents the growth rate of 2.22% and 4.04% respectively. These growth rates are the clear sign of heavy decline in comparison with prior month. In addition, the Industry experts mutually underlined the fact that the dealerships in most of the cities are badly suffering due to rising market pressure.

A group of dealerships dealing in different vehicles consist of own and luxury brands ensured their presence in a dealer conference held in Beijing. Most of the dealers confirmed that, even though they have accomplished their sales marks for the eight initial months of the year but they still rest in net deficit.

Industry’s expert Mr. Su also passed his insights during the conference that; the massive slump did not occur due to bad market conditions, it was caused by rigid legislations of vehicle registrations taking place in important Chinese cities. He further added: these policies have become much severe in Beijing like never before, because of strict regulations imposed for the intension to confine the free movement of used cars.

Currently, the share of used car holds 60 percent of all the automobile sales in Beijing. That means, more than half of the automobiles, the buyers pay for, are from the second-hand car market. This rising consumption of used cars has led the prices pop-up sky-high, resulting in driving back the buyers of new cars; that has constrained the sales growth towards constant decline.

According to official statistics, Beijing city contains up to 450 verified dealerships. There were usually 20 new dealerships kicked off for business purpose annually; but, owning to severe hardships facing by Beijing’s market, the dealerships have rapidly declined and rest at 10 up till now this year.

In accordance to Mr. Su, if around 800,000 automobiles would be sold in a year, then dealers would have a great opportunity to expand their operations and maximize profit margins. On the contrary, the rigid legislative structure has cut down the overall sales and paint negative picture over dealerships. Therefore, the dealers trimmed down the prices this April anticipating an increase in sales figures, driving towards profit mitigation. Due to continuous adversity, most of the luxury brand dealerships have refrained from the industry on permanent basis. While, many of the own-brand automobile dealers have be compelled and looking towards wind up their operations due to exact reservations.

Coming into August, numerous dealerships even initiated halting purchasing new stock, leading to slight changes in their relationships with automobile manufacturers. Mr. Su claims that “this is because of timely practices made by the manufacturers when the automobile restriction policies on the brink of being executed, which has aided to drop some pressure from the dealerships that they have been facing since a long”.