Shanghai (Gasgoo)- On June 30, 2024, the China Automobile Dealers Association (CADA) released the latest "China Automobile Dealers Inventory Alert Index" (VIA), showing that in June 2024, the VIA for Chinese automobile dealers was 62.3%. This represents an 8.3 percentage point increase year-on-year and a 4.1 percentage point increase month-on-month.
The index is above the boom-bust threshold, indicating that the automotive circulation industry is in a downturn.
In June, several regions entered the busy farming season, with hot weather and frequent rain in the south region, adversely affecting dealer traffic and sales. Despite the incentives from the trade-in policy, the boost from the Duanwu Festival holiday, and the impact of the large-scale "618" shopping event, coupled with dealers' mid-year sales sprint strategies, dealer inventories increased in June, and transaction prices continued to fall. Although market sales showed a slight month-on-month increase, dealer business conditions continued to deteriorate.
In the short term, the "trade-in" policy's impact on the car market remains unclear, said the CADA. According to dealers’ feedback, only less than 20% of consumers inquired about the policy in-store, and the actual transaction rate was less than 10%. Most dealers stated that they are still mainly promoting the policy, with a few noting that the policy has certain limitations. Overall, it is expected that June's passenger car end sales in China would see a slight increase compared to the previous month, reaching around 1.75 million units.
As the mid-year performance assessment approaches, dealer inventory levels have risen. To meet their mid-year targets, many dealers are resorting to "price for volume" strategies, significantly lowering new car prices and reducing gross profit margins on bare cars. The survey indicates a clear division in the performance of dealer sales targets for the first half of the year: 18.4% of dealers have completed their targets, 34.8% have completed over 80% of their targets, while 13.5% have achieved less than 50% of their targets.
Looking at the indices by brand type, in June, the VIAs for luxury & imported brands, joint-venture brands, and China's self-owned brands saw slight month-on-month increases of 5.8, 4.6, and 1.5 percentage points, reaching 66.4%, 60.8%, and 61.5%, respectively.
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