Price cuts, fuel costs and lack of new models sapping demand, survey finds Anaemic sales growth and plummeting prices are eroding the performance of car dealers on the mainland, according to a Deutsche Bank report. Sales had disappointed dealers in the traditional fourth-quarter peak season, as frequent price cuts continued to dampen consumer sentiment, the report said. 'The financial performance of dealers continues to deteriorate rapidly,' the report said, citing a survey by consultancy Asia Automotive Resources. 'Dealers of most brands have experienced a dramatic decline in profits and most claimed that they are selling cars at a loss.' About 30 dealers of major car brands in Beijing, Shanghai and Guangzhou were interviewed, out of hundreds of dealers in the cities. According to the China Association of Automobile Manufacturers, nationwide passenger car sales rose 3.13 per cent year on year last month. Growth has been slowing steadily from almost 80 per cent in February. Asia Automotive Resources chief China representative Liu Fei said higher fuel prices and tighter bank lending policies were also to blame for the poor sales. Some Beijing and Guangzhou dealers of Dongfeng Peugeot Citroen Automobile closed down, as did four Shanghai Volkswagen dealers, according to the survey. More than 60 per cent of the dealers surveyed said they did not expect to meet this year's sales targets and were discounting cars on their own accord without co-ordination with manufacturers. As slimmer profit margins prompt consolidation of the dealership industry, carmakers have lowered production targets and reduced pressure on dealers to take their stock. As a result, manufacturers' inventory was cut to just under 100,000 units last month from more than 140,000 units in June, the Deutsche Bank report said. Still, Deutsche Bank expected a greater number of new product launches would help lift growth next year. A lack of new models was partly to blame for the poor sales growth this year. It forecast passenger car sales to grow between 10 per cent and 13 per cent next year, compared with an expected 15 per cent this year and 75 per cent last year. Consultancy CSM Worldwide expected 40 new models to be launched in China next year, up from 20 this year, the report said. But dealers were more pessimistic on car prices than in a previous survey in August. Some 53 per cent said car prices would fall by 5 to 10 per cent next year, up from 29 per cent in August. About 18 per cent thought prices would fall 10 to 15 per cent next year, up from 4 per cent in August. Deutsche Bank expected price cuts to continue next year, but said they would be less than the about 11 per cent so far this year and 9 per cent last year.