Is The Automotive Sector In China In Crisis? Yes — But Due To Overcapacity: There Are So Many Cars Left That There Is No More Room To Store Them

Written by Romário Pereira de Carvalho

Published on 17/07/2025 at 12:08

Imagem representativa: IA

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Automakers Force Vehicle Entry into Dealerships, but Price Wars and High Inventories Put Dealers and Manufacturers in Deep Crisis in China

The electric vehicle industry in China is facing a silent collapse. After years of intense competition for lower prices, the country is now confronted with an unexpected problem: an excess of vehicles on dealership lots.

The attempt to boost sales has had the opposite effect. Automakers and dealers are plunged into a crisis of inventory and store closures.

Dealerships Turn into Deposits

Chinese manufacturers have resorted to so-called “automated registrations” to inflate their sales numbers. This practice involves registering cars as if they were sold, even without buyers.

ARTICLE CONTINUES BELOW

Financial Pressure and Cash Flow

Retail networks are calling for help. In a statement released on Tuesday, they requested that automakers stop forcing the entry of more cars.

According to Reuters, the price war is eroding cash flow, undermining profitability, and forcing store closures.

The China Automobile Dealers Association warned that the situation has become even more difficult.

The current conditions are described as “even more stringent” than before. For the sector, it is urgent that manufacturers stop pushing inventory onto dealers and begin setting more realistic production targets.

Criticism of Automakers’ Practices

Dealership representatives also claim they should not be pressured to leave the distribution network.

They criticize the use of “channel optimization” as justification for closing stores. According to them, these actions only amplify the negative impact on an already saturated market.

Official Bodies React

In light of the situation, the China Association of Automobile Manufacturers and the Ministry of Industry and Information Technology issued public alerts.

They condemn the “disorderly price wars” and point out that the decline in profit margins demonstrates the escalating destructive competition among companies in the sector.

With information from Xataka.

Is The Automotive Sector In China In Crisis? Yes — But Due To Overcapacity: There Are So Many Cars Left That There Is No More Room To Store Them

Automakers Force Vehicle Entry into Dealerships, but Price Wars and High Inventories Put Dealers and Manufacturers in Deep Crisis in China

Dealerships Turn into Deposits

Financial Pressure and Cash Flow

Criticism of Automakers’ Practices

Official Bodies React

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Is The Automotive Sector In China In Crisis? Yes — But Due To Overcapacity: There Are So Many Cars Left That There Is No More Room To Store Them

Automakers Force Vehicle Entry into Dealerships, but Price Wars and High Inventories Put Dealers and Manufacturers in Deep Crisis in China

Dealerships Turn into Deposits

Financial Pressure and Cash Flow

Criticism of Automakers’ Practices

Official Bodies React

A Chinese factory in Guangdong is assembling a humanoid robot every 30 minutes while Tesla, Figure, and Boston Dynamics still struggle to deliver 10 thousand per year.

While an average building in London or New York takes three years to be completed, in China a 26-story tower went up in five days with about 100 workers, and the global modular construction market already moves US$ 95 billion per year.

Australia installs giant concrete structures on the seabed 800 meters from the shore to create an ocean intake for desalination that will draw in saltwater and produce 30 million liters of drinking water per day.

Secret chamber sealed 4,500 years ago found in the Pyramid of Khufu, and Hawass announces its opening to the world in 2026

A public school student single-handedly created a machine capable of treating water for up to 50 people using only solar energy. It was awarded third place at one of the most important science fairs in the world.

Germany installed vertical solar panels on a lake in Bavaria, and the result broke conventional logic: instead of producing energy at midday peak, the plant generates more early in the morning and in the evening, exactly when families turn on appliances and factories are in full swing.

China has begun the second phase of energy assistance to Cuba with a 120 MW solar generation plan, and the first result is a photovoltaic park with batteries that regulates voltage, controls frequency, and provides local autonomy to an island suffocated by chronic blackouts.

Boeing takes off in Everett with the first production 777-9 for Lufthansa, measuring 76.72 meters in length and equipped with GE9X engines of 220,000 pound-feet.

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