The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes addresses topics from across the investing world.
In today's edition, Brendan discusses problems in the world's biggest auto market, China. Sales increased in the country in May, but deliveries increased at a higher rate. This shows that automakers are delivering more and more cars to dealerships, but dealership inventories are growing because they can't sell the cars fast enough. This leads to the dealerships offering price cuts and other incentives. Considering that most automakers book sales when they deliver cars to dealerships in China, not when the cars are actually sold, this likely won't be reflected in automakers' China sales numbers for another few months. But this is a big issue to keep an eye on in the world's biggest auto market. Check out the video below to see which automakers could be vulnerable to the China slowdown.
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