The China Automobile Dealers Association (CADA) recently released its latest monthly Vehicle Inventory Alert Index (VIA) for July 2025. The index stood at 57.2%, showing a 2.2 percentage point decrease compared to the previous year but a 0.6 percentage point increase from June. This indicates a mild downturn in overall market sentiment within the automotive distribution sector.
The slight uptick in the inventory warning index was expected as July typically marks the beginning of the traditional off-season for auto sales. Additionally, the sales push in June had already absorbed much of the short-term demand. While passenger vehicle sales saw a month-on-month decline in July, the lower index compared to the same period in 2024 suggests a healthier year-on-year sales environment, highlighting ongoing momentum in the broader market.
Several factors contributed to the softened demand in July, including seasonal influences, extreme weather conditions, the phased reduction of local subsidies, decreased commissions on auto loans, and reduced factory-level promotions. These challenges led to increased consumer hesitation, resulting in lower showroom traffic and closing rates.
In terms of vehicle type, the VIA for luxury & imported brands and mainstream joint ventures increased to 61.8% and 61%, respectively, in July. However, China’s self-owned brands experienced a drop in their VIA to 52% from the previous month.
According to data from the China Passenger Car Association (CPCA), retail sales of passenger vehicles from July 1 to 27 reached 1.445 million units, showing a 9% year-on-year increase but a 19% decrease from June. New energy vehicles (NEVs) accounted for 789,000 units, reflecting a 15% year-on-year rise but a 17% month-on-month decline.
The CADA reported that July sales slightly exceeded expectations, with passenger vehicle retail sales projected to reach approximately 1.9 million units.
Overall, the automotive market in China continues to face challenges in July, with various factors influencing consumer behavior and sales performance. Despite the temporary downturn, the industry remains resilient, with opportunities for growth and recovery in the coming months.
