China's vehicle inventory alert index in July 2025 drops YoY, but edges up MoM

Shanghai (Gasgoo)- On July 31, the China Automobile Dealers Association (CADA) released its latest monthly Vehicle Inventory Alert Index (VIA), which stood at 57.2% in July 2025. While this marks a 2.2 percentage point drop year-on-year, it represents a 0.6 percentage point increase compared to June. The figures suggest a mild downturn in overall market sentiment across the automotive distribution sector.

The uptick in the inventory warning index comes as no surprise, with July marking the start of the traditional off-season for auto sales. In addition, June's year-mid sales push by automakers and dealers had already absorbed much of the short-term demand. As a result, July saw a month-on-month dip in passenger vehicle sales. However, the lower index compared to the same period in 2024 indicates a healthier year-on-year sales environment, underscoring continued momentum in the broader market.

A range of headwinds contributed to softening demand in July. Seasonal factors were compounded by bouts of extreme weather, the phased withdrawal of local subsidies, reduced commissions on auto loans, and a pullback in factory-level promotions. These developments heightened consumer hesitation, dampening showroom traffic and closing rates.

By vehicle type, the July index of luxury & imported brands and mainstream joint ventures reached 61.8% and 61%, growing 7.8 and 2 percentage points over the previous month, respectively. However, China's self-owned brands saw its VIA drop 3.4 percentage points from a month ago to 52% in July.

Data from the China Passenger Car Association ("CPCA") shows that from July 1 to 27, retail sales of passenger vehicles reached 1.445 million units, up 9% year-on-year but down 19% from June. New energy vehicles (NEVs) accounted for 789,000 of those units, reflecting a 15% year-on-year increase and a 17% month-on-month decline.

The CADA noted that July sales slightly exceeded expectations, with passenger vehicle retail sales projected to reach around 1.9 million units.