Dealer inventory coefficient of FAW CAR, one of leading automakers in China, was 2.5, with a monthly rise of 12% and yearly decrease of 8%, in June, higher than that of the whole industry, about 1.55.

 

Theoretically, it may take dealers about half and two months to sell out all these vehicles without any production.

 

Sales overall suffered a yearly drop of 33.4% in the first four months. Sales of cars dropped by 19.8%; sales of SUV and MPV both dropped by more than 60%.

 

The automotive market in China remained stagnant in 2015. Only by the implementation of policy on halving tax on purchasing passengers vehicles with displacement of 1.6L or less, did the market get slight development with a rise of 4.7% in sales, proving the lowest growth in the past five years. The implementation of this policy has led to a considerable rise in sales of vehicles of Chinese brands. The growth rate was reportedly 8.14% in the first half year.

 

The improvement of the overall market, however, hasn’tencouraged development of FAW Car, leading to its stagnant sales and high inventory. Factors including loss in revenue, lack of development in new modes and drop in terminal sales has resulted in worry of dealers.

 

Development of new modes has failed to meet the market demands, leading to drop in sales. Compared to other automakers, FAW Cars has made worse performance in product development and market positioning.

 

Low price and high quality of configures turn out to be key factors decidingsuccess of automakers in China. FAW Car lacked new product to meet demands of customers, leading to drop in sales.

 

Therefore, it seems not be easy for FAW Car to decrease inventory, improve sales and accelerate development of new products in a short term.