China Automobile Dealers Association: China's auto dealer inventory warning index is 49.5% in June 2022

In June , the epidemic was gradually brought under control, and supporting consumption promotion policies such as national tax cuts, local government subsidies, manufacturer subsidies, and dealer promotions took effect, which initially showed a strong pull on the demand side, and the automobile market recovered rapidly. Under the dual effects of policies and promotions, it is estimated that the terminal sales of all-caliber narrow passenger cars in June will be about 1.75 million units, and the sales of passenger cars will turn from negative to positive year-on-year, with an increase of about 5% .

As the epidemic situation improves, dealers' sales rhythm has improved significantly. June is the half-year task assessment node, and dealers are rushing to complete tasks and have a strong motivation to replenish inventory. Due to the large losses in dealer operations and sales in April and May , less than 10% of dealers completed their half-year tasks as planned, and only 40% of dealers had a completion rate of more than 70% . Dealers are facing problems such as reduced profits per vehicle, declining performance, and slow capital turnover. With policy support, dealer sales have begun to pick up, and it is expected that operating conditions will gradually improve in the future.

We conducted a questionnaire survey to find out how the purchase tax exemption policy is performing in the terminal market. The survey sample covers 21 provinces, 88 cities, 16 dealer groups, and 36 auto brands.

Dealers generally believe that the introduction of the 60 billion yuan car purchase tax reduction policy has boosted consumer confidence, increased the number of first-time buyers and replacement buyers, and effectively reduced the purchasing pressure of consumer groups. The purchase tax policy has initially shown its effect. Currently, 33.8% of dealers have increased the discount for new cars, 32.4% of dealers have increased customer traffic year-on-year, and 58.4% of dealers have increased new car sales in June compared with May .

From the perspective of sub-indices: In June , the inventory, market demand, average daily sales volume, and operating conditions index increased month-on-month, while the employee index decreased month-on-month. The intensive introduction of consumption promotion policies has boosted consumer confidence in the short term, and dealers' customer flow and transaction conditions have improved significantly, with operating conditions better than last month.

From the perspective of regional indexes: In June , the national total index was 49.5% , the northern region index was 50.8% , the eastern region index was 43.7% , the western region index was 56.6% , and the southern region index was 57.6% . With the support of policies, the auto markets in the northern and eastern regions recovered rapidly, and the inventory warning indexes in the two regions entered or approached the prosperity range; the southern region ushered in continuous heavy rainfall in a large area, floods broke out in Guangdong, Jiangxi and other places, and the inventory warning index in the southern region rose.

From the perspective of brand type index: In June , the import & luxury brands, mainstream joint venture brands, and domestic brands index decreased month-on-month. The policy of halving the purchase tax has benefited most joint ventures and a small number of luxury brand cars, with overall sales improving and the inventory warning index declining.

Market prediction for next month: In July , auto shows in some regions have been launched one after another, new cars have been launched intensively, and the combined stimulus policies will continue to drive sales to rebound. Under the guidance of policies, the market growth effect in June was more prominent, and the market performance in July is expected to be basically the same as that in June .

The China Automobile Dealers Association recommends that as the uncertainty in the automobile market increases in the future, dealers should rationally estimate actual market demand based on actual conditions, reasonably control inventory levels, and never relax their epidemic prevention efforts.