China Automobile Dealers Association: Auto dealer inventory coefficient is 1.70 in July 2023

On August 10, 2023, the China Automobile Dealers Association released the results of the "Auto Dealer Inventory" survey in July 2023: the comprehensive inventory coefficient of automobile dealers in July was 1.70, an increase of 25.9% month-on-month and 17.2% year-on-year. The inventory level is above the warning line.

Inventory coefficient increased both year-on-year and month-on-month in July

July is traditionally an off-season for the auto market, but the overall market performance was better than expected. In the first half of July, as manufacturers and dealers slowed down their production and sales, the promotion efforts in the terminal market were somewhat withdrawn, and the summer tourism boom was superimposed, the auto market was relatively flat. In the second half of the month, policies to promote consumption continued to be introduced, the "100 cities, 1,000 counties and 10,000 towns" auto consumption promotion activities were carried out in depth, and local consumption promotion activities continued. In the second half of July, terminal sales performed strongly. Dealers replenished their stocks in the last week of July in preparation for the start of the school season in August, and the overall inventory level increased.

The inventory coefficient of high-end luxury, imported, joint venture and domestic brands has increased

The inventory coefficient of high-end luxury and imported brands was 1.22, up 40.2% month-on-month; the inventory coefficient of joint venture brands was 1.89, up 26.8% month-on-month; and the inventory coefficient of domestic brands was 1.69, up 18.2% month-on-month.

Brands with the highest inventory depth in July

In July, there were 10 brands whose inventory depth exceeded 2 months, among which the brands with the highest inventory depth were Beijing Auto, Dongfeng Nissan and Beijing Hyundai.

Cautiously anticipate market demand in August 2023 and rationally control inventory

August is the start of the school year, and there is a strong demand for new car purchases and replacements. At the same time, the 818 Car Buying Festival, Chengdu Auto Show and other autumn auto shows will all drive new car sales higher. There are also unfavorable factors in the auto market in August. Recently, due to the impact of typhoons, heavy rains or severe floods have occurred in many places. Residents in the affected areas have suffered varying degrees of property losses. It is expected that consumers in some areas will be less willing to buy cars.

With the introduction of a new round of policies to promote consumption, the auto market is expected to show a seasonal recovery. On July 31, the National Development and Reform Commission and 13 other departments issued "Several Measures to Promote Auto Consumption", which included ten measures such as optimizing the auto purchase restriction management policy and supporting the renewal of old cars. Local governments also responded quickly. For example, Guangdong promoted the relaxation of the "license plate restriction" policy in Guangzhou and Shenzhen; Jiangxi Province will issue 100 million yuan in the second half of the year for the issuance of consumer coupons; Henan announced that the car purchase subsidy policy will be extended to the end of December 2023. Automakers also continue to increase terminal discounts. SAIC Volkswagen, Leapmotor, Chery New Energy, SAIC MG, Great Wall Ora, Nezha, etc. have also launched limited-time discount activities. Combined with the "Hundred Cities Linkage" Auto Festival and the "Thousands of Counties and Towns" New Energy Vehicle Consumption Season activities that will continue in the second half of the year, the consumption demand in the auto market will be further released.

The China Automobile Dealers Association recommends that dealers should rationally estimate actual market demand based on actual conditions and reasonably control inventory levels to prevent excessive inventory pressure from leading to operational risks.