China's auto makers experienced a "black May" of falling sales and bulging inventories, leading to concerns that many may have to drop out of the market, state media reported Sunday.
During the month of May auto sales plunged 20 percent, while unsold cars made up more than 10 percent of the total output, Xinhua news agency said, without providing precise data on car numbers.
The situation has caused dealers to worry that the auto market has reached a turning point at which the weakest competitors will be "washed out," according to the agency.
China's auto-making industry is made up of 123 companies, consisting of just a handful of very large players and a multitude of small and inefficient firms.
The China Association of Automobile Manufacturers said previously that all the top five Chinese car makers recorded a decrease in sales in May from the month earlier ranging between 7.4 and 25.1 percent.
Auto sales by giant First Automotive Works Group Corp fell 24.2 percent in May from April to 67,200 units.
Predictions that the auto industry will have to consolidate have been fuelled in recent months by new macroeconomic policies seen as designed to force revolutionary change.
Concerned about over-capacity in the auto industry, policy makers in Beijing have been engaged in a lengthy effort to curb lending to the sector.
And last month, the top economic planning body published a long-awaited blueprint for the auto industry, raising the bar for companies wishing to engage in auto manufacturing.
The new regulations include a requirement that any new manufacturing company must have a minimum investment of two billion yuan ($240 million).
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