China Dealer Halts Porsche, VW Stores Amid Price War
By An Limin
A Chinese dealership group has suspended operations at two Porsche centers and a Volkswagen outlet, underscoring mounting pressure on foreign automakers and their retail networks as China’s auto price war squeezes cash flow.
Dongan Holding Group said Friday that it had halted business at two Porsche dealerships in Zhengzhou and Guiyang, as well as a Volkswagen store in Zhengzhou.
The dealer cited a deteriorating economic environment, weakening consumer demand and intense industry competition that had weighed on its operations.
Employees at the affected stores have been placed on leave and will receive pay at the local minimum living standard during the shutdown, the company said, noting it plans to settle outstanding salaries within 60 days. The reopening date remains uncertain.
The suspension has left some customers unable to obtain vehicle certificates of conformity, documents required for registration. Dongan said it is negotiating with banks and manufacturers over the release of the certificates. In China’s traditional dealership model, these certificates are often pledged to banks under inventory financing arrangements until loans are repaid.
Porsche China said Thursday that it apologized to customers and was working with police and other authorities to verify the situation, noting that it would prioritize protecting consumer rights.
The closures highlight growing stress on traditional dealership models in China as the market pivots toward new-energy vehicles (NEVs) and competition intensifies. Auto sales peaked in the country in 2018, and while overall growth later resumed, momentum shifted to NEVs. Dealers tied to slower-moving legacy brands have faced shrinking margins, with some selling cars at a loss to maintain cash flow.
Porsche, once buffered by its premium positioning, has not been immune. Sales in China fell from about 96,000 vehicles in 2022 to 57,000 last year. Sales dropped a further 26% year-on-year in the first three quarters of this year, to 43,000 units. Pressure on dealers became visible in May 2024, when Porsche retailers in China staged a joint protest over inventory burdens and sales targets.
Despite the challenges, Porsche has remained committed to China. In November, it opened a new R&D center in the country — its largest outside Germany — focused on developing infotainment and driver-assistance systems for the Chinese market, which the company said would allow it to respond more quickly to local consumer demand.
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