A Chinese automobile dealership that managed up to 80 locations in the southern province of Guangdong declared bankruptcy last week, indicating that the fierce rivalry that has roiled the world’s largest auto industry may linger another year.

On Jan 17, salespeople from Guangdong Yongao Investment Group informed consumers that the firm had collapsed and that orders had been cancelled.

This was while staff were waiting to be paid outstanding salaries, according to Chinese media outlets.

The dealership marketed over a half-dozen brands, including Honda Motor Co., Volvo Car AB, and Guangzhou Automobile Group Co.’s electric car brand Aion.

Photos uploaded on social media showed roughly 20 yellow tow trucks being despatched last Wednesday, with users claiming that they were sent by banks to repossess automobiles.

However, Bloomberg News was unable to confirm the photographs.

Yongao’s case demonstrates how dealers are being pressed on numerous fronts.

Automakers’ high sales targets are putting pressure on them to get automobiles out the door, but a faltering Chinese economy has caused many buyers to postpone purchases in the hopes of receiving greater discounts.

Additionally, the China Automobile Dealer Association reports that just over a third of the country’s vehicle distributors met their sales objectives last year.

According to Netease News, the firm stated on Friday that three years of Covid restrictions, changes in the car industry, and weak risk management had pushed it into a crisis.

Yongao has formed a management unit that will work to assure automobile deliveries to clients and pay unpaid salaries. According to the article, some dealerships have shuttered and vehicles have been relocated as part of a contingency plan.

Employees complained to the Dongguan government about the firm withholding salaries in April of last year, according to NBD newspaper.

China’s passenger automobile sales have stalled since 2017, when they peaked at 24 million units.

Meanwhile last year, deliveries totalled 21.7 million, according to the China Automotive Technology and Research Centre.

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