Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Auto Enterprises are Pressurized to Adjust Sales Target in 2010 - According to statistics of Chinese Association of Automobile Manufacturers, by the end of July, the inventory of auto enterprises totaled 549,100, rising by 44,400 compared with that at the beginning of July. Data show that the inventory of enterprises suffered slight decline in May and June of 2010 and then rises a little to a reasonable level.
The growth of the inventory is mainly contributed by passenger vehicles. The inventory of passenger vehicles was 371,500 at the end of July 2010, rising by 44,400 compared with that at the beginning of July 2010. The inventory of cars rose by 21,900, reaching 251,400 at the end of July 2010. The inventory of commercial vehicles maintained 173,100 in July 2010.
With the decline of auto sales, the increase of inventory pressure and fund risks and the blind expansion of 4S shops by auto manufacturers, auto 4S shops are confronted with survival risks. The number of newly added 4S shops in China totaled 2,256 in 2010H1, in contrast to the sharp rise of auto inventory and the decrease of auto price. This makes it more difficult for auto distributors to acquire remarkable profits and enough development space. A new round of integration of auto distributors is expected to occur in 2010H2.
2010Q3 is traditionally the offseason for auto sales. Thus, the auto sales and production both suffer decline on the month-on-month basis. Their YOY growth rates are also slowed down. The production and sales volume in Chinese auto market have sustained month-on-month decline for four consecutive months. The inventory pressure of auto enterprises is increased. It is forecast that the inventory will further rise in 2010Q3. The auto industry assumes a downward trend and manufacturers will probably adjust their auto sales targets of 2010H2.
Despite the decline of four successive months, the total sales volume in Chinese auto market reached 10.26 million in the previous seven months of 2010. Hence, Chinese Association of Automobile Manufacturers is pretty optimistic about the market and has released the sale expectation of 15 million for the whole 2010. 
By contrast, some auto enterprises cut down their target sales volume given the depressed auto market. BYD takes the initiative to lower its sales target from 800,000 to 600,000. It is reported that some enterprises have followed up or plans to cut down their sales target. In comparison, some auto enterprises are cautious about the adjustment. Besides homemade brand manufacturers, it is reported that some auto manufacturers of European brands also plan to lower their sales target in September 2010 providing that the auto market does not see prominent recovery in August.  
The expansion of auto production capacity and the continuous entry of new auto models will probably result in price fluctuation in the market. With sufficient supply but slowed demand growth rate, the competition among auto enterprises will be intensified. To enlarge auto sales, manufacturers are likely to initiatively adjust the auto price to raise their market shares and realize their sales targets.
The majority of auto enterprises have not adjusted their sales targets at present. Nonetheless, if the poor sales continue for one or two months, more auto enterprises are predicted to adjust their sales targets.  
The report “Research Report on Chinese Auto Distribution, 2010-2011”mainly focuses on:
-Status quo of Chinese auto distribution industry
-Development environment of Chinese auto distribution industry
-Competition on Chinese auto distribution market
-Financing channels in Chinese auto distribution industry
-Major auto sales models in China
-Prediction on development of Chinese auto distribution industry
-Investment opportunities in Chinese auto distribution industry
-Contacts of major auto distributors in China

For more information please visit:

If you are interested in sample reading or purchase of the report, please do not hesitate to contact Eileen:, Tel: 86-21-6150-9706,