Car Dealers in China’s Yangtze Delta Region Warn of ‘Severe Challenges’

A coalition of four influential dealer associations in China’s Yangtze River Delta—spanning Shanghai, Jiangsu, Zhejiang, and Anhui—has raised the alarm over what it calls “severe challenges” facing the industry. In a joint WeChat letter to automakers, they highlighted three urgent issues:

1. Excessively high inventories—dealerships are flooded with unsold cars, elevating storage costs and tying up working capital.
2. Price wars cutting dangerously low—some manufacturers are reportedly pushing dealers to sell at or below cost, echoing regulators' concerns of anti-competitive behavior.
3. Suspended consumer financing—banks have paused car loans since June, silencing buyers and locking up further sales revenue. :contentReference[oaicite:0]{index=0}

🚨 Regional and national fallout
This is not an isolated incident. Similar letters have emerged from Henan and Jiangsu provinces as dealers and suppliers nationwide push back. With the delta region accounting for nearly a quarter of China’s new vehicle market, the plea carries considerable weight. The associations warned that persistent below-cost selling and an unchecked price war could threaten dealers’ financial solvency. :contentReference[oaicite:1]{index=1}

📈 Regulatory backdrop
To address the turmoil, Chinese lawmakers approved amendments to the Anti-Unfair Competition Law, prohibiting forced below-cost pricing starting October 2025. Dealers argue this change is needed sooner, alongside practical measures like inventory caps and realistic sales targets. :contentReference[oaicite:2]{index=2}

🔄 What happens next
Dealership groups want a seat at the table—proposing that automakers collaborate on setting inventory limits and targets that better reflect actual demand. Both manufacturers and regulators may now face choices: rethink aggressive discount strategies, enforce new rules, or risk dealer bankruptcies.

Key takeaway:
China’s car retail sector is at a tipping point. Dealers are calling on automakers to rethink deep discounting and inventory misalignment, while lawmakers stiffen regulations. The outcome could reset pricing norms and supply-demand balance in the world’s largest auto market.