“It’s best time to buy Audi Q7 series， which are all in good discount now，” introduced by a sales-boy Liu， from Shanghai Audi 4S shop. “The fairest offer could enjoy 200，000 yuan discount， and can drive your own car right away. The series were the best seller last year， when had no discount at all， and should wait long time to really own it.”

The adverts of “On Sale”， “Buy and Get the Gift Package”， “Immediate Delivery”， are of the various common promotion slogans aiming to attract the attention of consumers in many 4S shops of all major brands of imported cars in China. The price of the imported BMW 7 Series goes down by a maximum of RMB 400，000; the imported four-door Porsche coupe Panamera offers a price reduction of RMB 335，000; the newly imported Mercedes-Benz G500 in stock offers a price reduction of RMB 230，000; the price of Touareg drops by RMB 150，000 to 200，000; even the imported Mercedes-Benz C200 2011 models of RMB 388，000 reduces its price by RMB 50，000; and more discount for high-profile models generally... In a sudden， Chinese find the imported cars are cheaper and can be delivered immediately.

According to the NDRC survey， which covered 36 different cities， imported vehicle prices continued to fall in the first half of this year， 0.83% decrease compared with the price at the end of last year， with average monthly price fall of 2.94%. Average monthly prices of imported sedan fell 4.58% compared with the same period last year.

Sufficient inventory， pressure on capital chain

“Many 4S shops promote that they are ‘sufficient in stock’. How can they not drop the price when the sufficient inventory is putting much pressure on the capital chain?” said Mr Xun， who works at the Sanlitun Sales Center of China Automobile Trading Co.， Ltd.，“Nowadays the profit of a single car sale is already very low， with some deals even at a loss.”

Compared with last year， when buying imported cars needed to wait at least three months to see the new car， this year， car owners can enjoy the immediate delivery once they pay the bill. Behind this fast driving satifaction that has brought tangible benefits to consumers， is the pressure of the sufficient in stock cars that brings forth to the car dealers.

Released on July 13 by the China Automobile Dealers Association， the“Survey Result on the Inventory of Car Dealers in the First Half of 2012”shows that the inventory coefficient has witnessed a rising trend in the first half of this year. According to the prevailing practice of international trade， the inventory coefficient between 0.8 to 1.2 reflects a reasonable range; if the inventory coefficient is above 1.5， it is reflecting that the inventory reaches an alerting level and needs to be focused on; if the inventory coefficient is above 2.5， it is reflecting that the inventory is too high， and the operating pressure and the risk are very high as well. The survey shows that the inventory coefficients of different brands of imported car are quite different， with the highest over 6.0. (See Chart 1 and 2)

The National Federation of Automobile Dealers Association also announced their “Survey Announcement of China’s Auto Dealers Group’s Purchase， Sales and Inventory in the First Half of 2012” on July 1. It reaches the same conclusion that the total inventory of auto dealers continues to rise， with a growth of 22.24% compared with the beginning of the year. In the filed of imported cars， the inventory of some models of imported cars has exceeded 60 days. Except the SUV dealers， the inventory coefficient of Japanese cars that are priced at around 300，000 to 600，000 reaches above 4. The data of the China Automobile Trading Center show that， in May of this year， the inventory coefficient of imported cars in China is 2.7， reaching the alerting level. The inventory of 82.6% imported cars is too high. The huge amount of inventory has caused funding constraints of the dealers， and even operating difficulties.

The imbalance of import and sales

In the first half of this year， the growth of car sales slowed down. In cities such as Beijing， Guangzhou and other places， in order to buy a car， you must first provide your proof of registered residence (Hukou)， and then get the lottery number of purchasing vehicles. Besides， the high oil prices， parking lot shortage， and traffic jams are increasingly offsetting the convenience and fast pace of driving. Thus， it becomes more and more difficult to stimulate domestic demand， and China’s auto consumption has stepped into the micro-growth era.

According to the statistics of China Association of Automobile Manufacturers， in the first half of this year， the number of car sales in China is 9，598，100， a year-on-year increase of only 2.93%. Although the growth in sales of imported cars is faster than local brands， even the growth of the top three， i.e. the growth of the German， Korean and Japanese cars was 14.6%， 13.8% and 10%， respectively.

At the same time， the speed of imports has far exceeded the pace of sales. According to the statistics of Customs， in the first half of 2012， an accumulated number of 589，000 imported cars have been imported through the Customs， a year-on-year growth of 26%.

Too fast channel expansion

According to the statistics of customs， the annual growth rate of imported cars in 2010 was 93%， and 30% in 2011. This rather astonishing high rate of growth in the Chinese auto market has made it a battleground for imported car companies， who all want to have a share of the huge cake. One of their major moves is to substantially expand their channel of sales since last year.

China Industry Research Network reports that in 2011， Audi and BMW added nearly a hundred outlets in China， with an annual increase of 50 to 80 in the next few years; MercedesBenz plans to add an annual increase of 35 to 40 dealers. According to another report， Mazda， who is unhappy with its sales last year， also plans a further expansion of its 365 dealers network by 15% this year. Ford will add 24 new dealers this year. Volkswagen SEAT， who is in trial marketing in China this year， plans to open 15 outlets by the end of the year. The ultra-luxury car Bentley also plans to add ten dealers.

In addition to their own channel expansion of the imported cars， Yan Jinghui， deputy general manager of the Beijing Asian Games Village Trading Market has revealed that there are already 20% of the domestic car dealers cater to be secondary agents of imported cars.

“With more stores selling imported cars， the single sales of one outlet would certainly drop; when the sales go down， the inventory is surely increased. If you are in a hurry to sell the cars， the profit will naturally shrink，” Mr Xun said.

The battlefield of the price war

In April this year， the top three German auto manufacturers， Mercedes-Benz， Audi and BMW triggered the price war to compete for market share， with an up to 20%-25% discount of their car models. After the fall of the dominoes， Toyota， General Motors and Honda had successively lowered their prices.

The Tencent Auto has released the “Dynamic Reports on Imported Car Market in the First Half of 2012”. It shows that the sales pressure has made the imported car terminals give significant preferential prices. (See Chart 3)

The large reduction of price of the imported cars also brings pressure on China-made cars， whose prices are in a declining trend and whose market is shrinking. According to the statistics of China Association of Automobile Manufacturers， in the first half of this year， the sales of domestic car brands accounted for less than 50%.

However， price falling range still hasn’t met consumers’ expectation. “The imported vehicles should have reduced their price much earlier， and offer more discount，” said Mr Zhao， owner of an Audi A6 in Beijing.