China auto sales slow in November as dealer stockpiles increase

Passenger-vehicle sales in China rose at a slower pace last month as inventory levels climbed in the world’s largest auto market.

Retail deliveries of cars, multipurpose and sport utility vehicles climbed 5 percent to 1.71 million units in November, the Passenger Car Association said Friday on its website. That compares with the 9.3 percent growth rate in October.

Dealers are cutting prices to reach targets set by automakers to qualify for year-end bonuses that account for more than half of their annual profits from selling cars, according to the China Auto Dealers Chamber of Commerce. A measure of vehicle inventory rose to the highest level this year last month, according to a separate dealer group.

“There are more and more auto dealers selling vehicles at losses as they struggle to keep afloat,” said Wang Ji, a Beijing-based director at the dealer chamber of commerce. “Overcapacity is the fundamental reason behind the production surplus and unless they fix it, there will be a reshuffle of auto dealers and automakers sooner or later.”

Foreign automakers have announced plans to increase production to win more sales in the world’s largest auto market.

Volkswagen AG said last month it will raise its Chinese plant capacity to more than the previously targeted 4 million autos a year by 2018. That compares with capacity there of more than 3.1 million vehicles in 2013.

Bayerische Motoren Werke AG, the world’s largest maker of luxury cars, said Thursday that it is paying “high attention” to requests from dealers in China to lower sales targets. The automaker said in July that it will increase annual production capacity in the country to 400,000 vehicles from its current 300,000 units.

General Motors Co., which counts China as its biggest market, posted a second straight monthly drop in sales of its Wuling vehicles in November. The Wuling brand accounted for almost half of the Detroit-based carmaker’s total sales in China in 2013.

Honda Motor Co.’s China sales fell 1.4 percent in November, putting it on track for a second annual decline in three years, after demand shrank for its Accord sedan and CR-V sport utility vehicle. (Bloomberg)