China Automobile Dealers Association: Auto dealer inventory warning index is 52.5% in October 2021

China Automobile Dealers Association: Auto dealer inventory warning index is 52.5% in October 2021

On October 31, 2021, the latest issue of the "China Automobile Dealer Inventory Alert Index Survey" VIA (Vehicle Inventory Alert Index) released by the China Automobile Dealers Association showed that the automobile dealer inventory alert index in October 2021 was 52.5%, a year-on-year decrease of 1.6 percentage points and a month-on-month increase of 1.6 percentage points. The inventory warning index is above the boom-bust line and is still in the recession range.

In October, the chip supply situation eased slightly compared with September, but still could not meet production demand. During the National Day holiday, dealers did not carry out large-scale marketing activities due to insufficient car supply. Although the automobile market has entered the traditional peak season and the demand for cars has increased, the price increase caused by insufficient terminal supply has caused consumers to wait and see. In mid-to-late October, due to the impact of multiple epidemics across the country and the busy farming season, the silver October car market was obviously not as hot as in previous years, showing a weak supply and demand pattern.

At present, dealers' inventory levels are generally low, and some manufacturers have reduced or cancelled business performance indicators to address the shortage of popular models and discount recovery. In response to the long car ordering cycle, manufacturers and dealers have introduced subsidy policies to secure orders and increase order conversion rates.

From the perspective of sub-indices: the survey shows that in October, inventory, market demand, average daily sales, and operating conditions index rebounded, but the employee index declined, and the risk of staff loss increased. In October, the chip shortage problem eased, automobile production capacity recovered, and the overall market situation was slightly better than in September.

From the perspective of regional indexes : the survey shows that the national total index was 52.5% in October, the northern region index was 54.5%, the eastern region index was 51.3%, the western region index was 52.1%, and the southern region index was 54.1%.

From the perspective of brand type index : From the perspective of brand type index, the import & luxury brand index, mainstream joint venture brand index and domestic brand index rose slightly month-on-month in October.

In November, the chip gap problem is expected to continue to narrow, but due to the outbreak in some areas, consumers are restricted from buying cars in stores. Even if dealers rush to increase sales at the end of the year and start auto shows and marketing activities, it will be difficult to fully release market demand. Sales in November are expected to be basically the same as in October.

At present, the overall chip supply in the fourth quarter is expected to be better than that in the third quarter. If automobile production capacity increases, market demand will be further released.

The China Automobile Dealers Association recommends that dealers should rationally estimate actual market demand and reasonably control inventory levels based on actual conditions to prevent excessive inventory pressure from leading to business risks. At the same time, do not relax epidemic prevention and control measures and continue to implement epidemic prevention and control measures.

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