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By Bloomberg

A group representing Toyota Motor Corp. dealers in one of China’s richest provinces is demanding that the automaker increase financial support and cut its sales targets to help reduce distributor losses.

More than 80 percent of the dealers in Jiangsu province for Toyota’s joint venture with China FAW Group Corp. made losses or barely broke even, according to the Jiangsu Automobile Trade Management Association. Some retailers have as much as 10 months worth of sales inventory, the group said, citing its surveys of the distributors.

Besides cutting sales targets, the manufacturer should increase the number of dealerships at a reasonable pace and help retailers expand their after-sales business, the association said in an e-mailed statement. Niu Yu, a Beijing-based spokesman for Toyota, referred a request for comment to Ma Chunping, a FAW-Toyota spokeswoman, who couldn’t immediately comment.

“Dealer profits are constantly being squeezed,” said Steve Man, a Hong Kong-based auto analyst at Bloomberg Intelligence. “Automakers are asking dealers to take on more inventories to keep factories churning, while dealers are cutting prices to move those vehicles in an increasingly crowded market.”

While China’s vehicle sales continue to expand and are forecast to exceed 23 million units this year, competition for customers has intensified as automakers announce plans for new factories and more brands enter the world’s largest vehicle market. Unsold stock on dealer lots rose to the highest level last month since August 2013, according to data from the China Automobile Dealers Association.

Dealer Demands

The complaints by FAW-Toyota dealers follow similar demands by distributors this month for Bayerische Motoren Werke AG and form part of a broader push by China’s auto retailers to gain more autonomy from manufacturers, which currently dictate the number and type of cars they sell.

Dealers are selling vehicles at losses to reach targets to qualify for year-end bonuses, which account for more than half of their annual profits from selling cars, the China Auto Dealers Chamber of Commerce said this month. It submitted a list of recommendations to the commerce ministry, which is reviewing rules governing the industry first implemented in 2005.