China’s auto export business might be booming – it overtook Japan last year as the world’s biggest car-exporting nation – but closer to home the situation is much bleaker. The domestic market has contracted, and that trend has just pushed a major dealer group into bankruptcy.
Guangdong Yongao Investment Group had 80 outlets across the southern province of Guangdong, selling multiple brands including Honda, Volvo, and China’s GAC Aion, Bloomberg reports. But last week it notified customers that the company had collapsed and orders were suspended, leaving customers waiting for cars wondering whether they’d see either their promised new vehicle or their money back. The firm’s employees are also in limbo, being owed wages that they’re now unlikely to receive, according to China’s National Business Daily.
Images recently appeared on social media showing around 20 yellow tow trucks that appeared to be there to repossess cars, though sources were unable to confirm this. But industry watchers say signs of the firm’s impending collapse have been there for a while, with disgruntled employees making complaints to the Dongguan government about withheld wages as far back as last April.
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The signs of distress in the overall car market, however, have been there for far longer. Sales grew rapidly between 2008 and 2016, but from there climbed only fractionally higher to a peak of 24 million units, before dropping away – and this was well before Covid and the chip crisis reared its head. Sales have had their ups and downs in the years since, but the overall trend is one of stagnation. Last year people in China took delivery of 21.7 million cars.
One Yongao customer Bloomberg spoke to had already taken delivery of his new Lynk & Co 03 before the collapse, but was still waiting for his dealership to sort the registration paperwork and pay the 14,000 yuan ($1,945) vehicle-purchase tax owed on the car. Other customers are likely to be even less fortunate, though state media says that a task force has been set up to investigate the collapse and protect buyers who have already paid in full for cars they’re still waiting for.
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