Car dealer Baoxin Auto is seeking HKD3.2 billion to HKD4.1 billion in an initial public offering (IPO) in Hong Kong to help expand its network of dealerships, which centers on luxury car brands such as BMW, Jaguar Land Rover and Audi. Car dealers face rising competition, industry consolidation and a sales slowdown, which means they must also work to offset rising inventory levels via discounting. “Many are going public to raise funds in order to keep growing,” says Yale Zhang, Managing Director of Shanghai-based consultancy Automotive Foresight. “The dealer business is not as profitable as 10 years ago but the required investment keeps rising. Many smaller operators are shutting down, especially if they are not in good locations,” Zhang said. The emerging winners in the sector are the bigger and better capitalized dealer groups, which continue to grow organically and through acquisitions. Pang Da Automobile Trade, the biggest Chinese auto dealer by market value, raised CNY6.3 billion in an April IPO in Shanghai. China Zhengtong Auto Services, the biggest Hong Kong-listed dealer, raised HKD3.13 billion in an August share sale that followed on its HKD3.65 billion IPO last December. Smaller rival Zhongsheng raised HKD1.3 billion selling shares in January. The company last year raised a combined HKD4.66 billion via a March IPO and a follow-on offering in October. Baoxin operates 28 full-service dealerships in China, mainly concentrated in  eastern coastal cities, and has plans to open 14 new one-stop showrooms and service centers by next June. Baoxin saw revenue rise 54% in the first half of the year to CNY5.23 billion, with luxury car sales accounting for 86% of the total by value, the South China Morning Post reports. Baoxin Chairman Yang Aihua expects sales of luxury cars in China would surge 44% to 1.3 million next year, after growing 30% to 900,000 cars this year. “Demand will still be strong next year, so we are bullish about our business. We hope to gain more luxury car brands,” Yang said. “Any slowdown in China’s economy may adversely affect demand for our automobiles. If there is any further fiscal or credit tightening by the Chinese government, demand for our automobiles as well as our access to external financing may decrease,” the prospectus said. The company plans to open showrooms in Zhejiang, Shandong and Tianjin, plus two dealership stores in Shandong and Liaoning, by the end of this year. More new stores and a repair center are on the cards next year in Tianjin, Guangdong, Jiangsu, Shandong, Zhejiang, Shanghai, Liaoning and Beijing.