China Automobile Dealers Association: July 2023 Automobile Market Pulse Report

In July 2023, the retail sales of passenger cars reached 1.775 million units, down 2.3% year-on-year and 6.3% month-on-month. Since the purchase tax was halved in July last year to boost new car sales, and July this year was normal sales, sales fell slightly year-on-year. At present, relevant governments and manufacturers continue to maintain high-level policies to stimulate consumption, and automobile market prices are relatively stable. However, July and August are traditionally off-seasons for sales, and the auto market has entered a rest period to prepare for the peak season of the golden September and silver October auto market.

At the end of July, the National Development and Reform Commission issued a notice on measures to restore and expand consumption, which clearly pointed out that the automobile circulation sector should optimize the management of automobile purchase and use and expand the consumption of new energy vehicles. The measures will further stimulate automobile consumption and lay a solid foundation for the prosperous development of the automobile market in the second half of the year.

The automobile market remained stable in July 2023. June slightly overdrew July sales. At the same time, July is the off-season for the automobile market, so sales performance is slightly lower than that in June. The national inventory coefficient rose slightly in July. In terms of regions, the GP1 in Central China is the lowest, and the inventory coefficient in Southwest China is the highest.

Overall analysis of the luxury brand market

In July 2023, the inventory coefficient of luxury brands rose to 1.29; GP1 was slightly adjusted to -10.5%. The weak consumption market has spread to the luxury brand market since this year. GP1 has increased after stabilizing for three consecutive months. In July, some luxury brand manufacturers provided different degrees of rebate subsidies for new cars sold in the first half of the year to reduce the profit pressure of luxury brand dealers.

In terms of brands, the brand lineup in the green light area remains stable, but the dispersion trend in the red light area is increasing. Infiniti, Cadillac and Hongqi brands need to pay more attention to inventory management, while Volvo and Audi brands need to focus on the profitability of single vehicles. In 2023, the market pressure on second-tier luxury brands will continue to increase. It is recommended that manufacturers pay more attention to the operating conditions of dealers, maintain a unified front with dealers, and jointly cope with market pressure.

From this month's luxury brand analysis, we can see that the top three luxury brands with the largest reduction in inventory coefficient are Jaguar Land Rover, Bentley, and Lincoln; the top three brands with the largest GP1 improvement are Porsche, Volvo, and BMW.

Overall analysis of the joint venture brand market

In July 2023, the inventory coefficient of joint venture brands was 1.79, a slight increase compared with the previous month, and GP1 slightly dropped to -12.6%. Since 2021, the joint venture brand market segment has gradually shown a trend of high competition pressure and declining market performance; currently, the joint venture brand GP1 has dropped to a relatively low position.

In terms of specific brands, the green zone brands are stable, mainly Japanese brands. However, the inventory and GP1 of Japanese brands have declined significantly this year. Dongfeng Honda has fallen into the yellow light zone for the first time in the past two years, and Dongfeng Nissan has been in the red light zone for a long time since this year.

Among the joint venture brands, the top three brands in terms of GP1 improvement are: Changan Ford, GAC Honda, and FAW-Volkswagen; the top three brands in terms of inventory coefficient reduction are: Changan Mazda, Jetta, and FAW Toyota.

Overall analysis of the domestic brand market

In July 2023, the inventory coefficient of domestic brands was 1.75, and GP1 was -4.8%, a slight increase compared with the previous month. Domestic brands have continued to perform steadily this year, and their comprehensive product strength has become stronger and stronger, and they are recognized by more Chinese consumers. However, the inventory of new cars of domestic fuel brands is still high, and it is hoped that fuel car manufacturers will pay attention to the inventory depth and financial health of dealers.

In terms of brands, the first echelon remained stable. BYD's inventory increased slightly, lagging behind Great Wall Wei brand/Tank, followed by Aion brand; Changan passenger car inventory and GP1 were slightly better than the average, beware of falling into the yellow light zone. It is recommended that brands that have been in the red light zone for a long time increase product competitiveness while continuing to pay attention to dealer inventory structure and profitability to improve the overall competitiveness of the brand.

In June 2023, the top three brands with declining inventory coefficients are: Roewe, Haval, and Tank; the top three brands with increasing independent brand GP1 are: Changan Passenger Cars, Geely, and Bestune.

The above is the market pulse of "sales, inventory, and profit" of each mainstream brand in the three major market segments. Maintaining long-term and stable returns for investors is the consistent mission of the China Automobile Dealers Association. Here, we would like to thank the dealers for their active participation. At the same time, in response to the various voices and feedback from dealers, the association will continue to communicate with manufacturers, hoping to protect the interests of investors and dealers through specific measures, and also hope that the association's platform and mechanism can further promote win-win results for manufacturers.