China Automobile Dealers Inventory Alert Index Shows Increase in June 2024
Shanghai (Gasgoo)- The latest report from the China Automobile Dealers Association (CADA) reveals that the “China Automobile Dealers Inventory Alert Index” (VIA) for June 2024 is at 62.3%. This marks an 8.3 percentage point increase compared to the previous year and a 4.1 percentage point increase from the previous month.
The index is above the threshold that indicates a boom-bust cycle, signaling that the automotive circulation industry is currently experiencing a downturn.
In June, various regions in China entered the busy farming season, experiencing hot weather and frequent rain in the southern region, which negatively impacted dealer traffic and sales. Despite incentives from the trade-in policy, the boost from the Duanwu Festival holiday, and the influence of the large-scale “618” shopping event, dealer inventories increased in June, leading to a decrease in transaction prices. Although there was a slight month-on-month increase in market sales, dealer business conditions continued to worsen.
The impact of the “trade-in” policy on the car market remains uncertain in the short term, according to CADA. Feedback from dealers indicates that less than 20% of consumers inquire about the policy in-store, with an actual transaction rate of less than 10%. Most dealers are still primarily promoting the policy, with some acknowledging its limitations. Overall, it is projected that passenger car sales in China for June will slightly increase compared to the previous month, reaching approximately 1.75 million units.
As the mid-year performance evaluation approaches, dealer inventory levels have risen. To meet their mid-year targets, many dealers are implementing “price for volume” strategies, significantly reducing new car prices and cutting gross profit margins on bare cars. The survey highlights a clear disparity in dealer sales target achievement for the first half of the year: 18.4% of dealers have met their targets, 34.8% have achieved over 80% of their goals, while 13.5% have accomplished less than 50% of their targets.
Examining the indices by brand type, luxury & imported brands, joint-venture brands, and China’s self-owned brands all saw slight month-on-month increases in their VIAs in June. These brands reached 66.4%, 60.8%, and 61.5% respectively.
