Car makers were expecting the Chinese market to sustain the growth but that hasn’t happened leading to dealers going into big losses due to huge inventory stock up.

2015 BMW 6-Series Front
BMW has paid $820 million subsidy to its dealers in China

China’s automobile industry is facing great deprivation as the automobile dealers in the country face big troubles. BMW recently had to pay a allowance of US $820 million to its dealers in China, this is one of the biggest subsidy in China’s automobile industry. BMW had been in a quibble with dealers in China as to who will pay the arrears that the dealers had been facing due to slow sales in the world’s largest automobile market.

BMW’s market share has been at a downturn since 2012 because of the falling retail prices of cars in China. The association did not speak about the collective losses over the years, just the final endowment of US $820 million was declared. BMW’s share subsequently got down by 2 percent in Germany. Finally paying the fat subsidy, BMW wants to recuperate the losses in China and move on. This is just a bad patch the company is going through, BMW aims to bounce back and pull through the market all over again.

2014 was lousy for other automakers as well, Toyota is also in attribution with its dealers in China because of the losses in the latter part of last year. Toyota has been losing money over the years, 10 percent of the dealers in China are in big debts and are thinking to shut their dealership as they see no future being part of the Japanese brand. The car traders in China sent an overall capital loss of US $353 million, getting these funds from the company is the only resort they have. The reason behind Toyota’s reckoning is believed to be the misinterpretation of market demand and in turn having stocked up too much inventory with dealers.

Toyota RAV4
Toyota dealers in China have no choice but to offer major discounts to sell vehicles