Latest news with #carDealers
Reuters
9 hours ago
- Automotive
- Reuters
Some Chinese banks vow to rein in commissions given to car dealers for auto loans
BEIJING, June 18 (Reuters) - Banks in China's Henan province said on Tuesday they will stop giving car dealers high commissions for auto loans taken out by buyers - a move that comes amid increased regulatory scrutiny of the sector. Chinese authorities have been keen to curb a deepening price war in the car industry and what they see as excessive competition among automakers. According to industry sources, some Chinese banks offer car dealers high commissions to lure borrowers and the dealers then use that money to provide discounts to car buyers, stimulating sales. The sources were not authorised to speak to media and declined to be identified. China Everbright Bank's ( opens new tab Zhengzhou branch, Henan Rural Commercial Bank and Bank of Communications' ( opens new tab Henan branch also said in statements that they will prevent car dealers from making it compulsory for customers to take out a car loan. The practice increases borrowing costs for consumers and ultimately harms the interests of both consumers and financial institutions, the lenders said. The banks added that interest rates on car loans should be no more than 6%. Until recently, the price war that began in early 2023 had shown little sign of abating, and tensions have been running high with some auto executives questioning the health of the sector. China's industry ministry summoned automakers to a meeting this month where they were told rein in the price war and excessive practices that have hurt the industry's supply chain. Since then, automakers have pledged to make payments to suppliers in 60 days, responding to an outcry from steelmakers over long payment times. Chinese auto dealers have also complained, calling on automakers to stop offloading too many cars on dealerships, saying the intense price war was damaging their cash flow, driving down their profitability and forcing some to shut.
South China Morning Post
27-05-2025
- Automotive
- South China Morning Post
Beijing asks carmakers, trading platforms to clean up used-vehicle market amid price war
Beijing has stepped in to monitor the trading of used cars as mainland China's automotive sector , saddled with overcapacity, is under pressure to improve profitability amid an escalating price war. On Tuesday afternoon, the Ministry of Commerce gathered industry groups, major carmakers and trading platforms for second-hand cars to discuss issues surrounding the sale of 'used vehicles with zero mileage', according to Reuters. The ministry was seeking to stabilise car prices in the world's largest automotive and electric vehicle (EV) market, according to two car dealers, where vicious competition has ensnared around 100 manufacturers. The ministry did not respond to a request for comment on Tuesday. Typically, cars that have never been driven are bought by second-hand dealers from manufacturers at very low prices before they are sold to consumers as pre-owned vehicles. 'To summarise, carmakers sell [practically] new cars through dealers of used vehicles at much lower prices,' said Tian Maowei, a sales manager at Yiyou Auto Service in Shanghai. 'The sales [model] helps individual companies reduce their inventory, but it does no good to the market [when] lower car prices have made it difficult for most carmakers to break even.' According to dealers, the second-hand cars that have never been driven are offered at prices more than 30 per cent lower than vehicles that are sold as new. It is not clear if the Ministry of Commerce would continue to allow carmakers and dealers to use the second-hand sales model in question. The dealers said the sales model might not be defined by the ministry as bending the law.
