China Automobile Dealers Association: China's auto dealer inventory warning index is 58.3% in January 2022

The overall market was stable in January 2022. Affected by the scattered epidemics, various places advocated staying in place for the New Year, and the reduction in the number of people returning home led to a slight decrease in car demand. Some places have introduced policies to encourage automobile consumption, stimulating some automobile consumption and boosting certain sales .

At the same time, the supply of automobiles has stabilized, and the inventory level of dealers has rebounded, but it has not yet returned to normal levels. The supply and demand mismatch caused by low inventory still needs some time to adjust. In addition, due to strict epidemic prevention and control, the number of consumers entering stores to buy cars has decreased, but orders were concentrated before the New Year, various preferential policies were narrowed, and terminal prices did not show obvious loosening, so dealers are in good profit.

Taking into account that some dealers continue to offset sales before the Spring Festival, and the actual sales converted from last month's reserved orders in January , it is estimated that the sales of full-caliber passenger cars in January 2022 will be the same as in December last year , at around 2.3 million vehicles .

From the perspective of sub-indices: In January , the inventory, market demand, and average daily sales indexes dropped sharply, mainly due to the dual impact of the epidemic and the Spring Festival. The overall trend of auto market demand and sales was weak. The employee index and business conditions index rose slightly month-on-month.

From the regional index situation: In January , the national total index was 58.3% , the northern region index was 60.2% , the eastern region index was 59.5% , the western region index was 59.3% , and the southern region index was 56.9% . Recently, the scattered epidemics have recurred, and consumers have been hindered from buying cars in stores, and the regional indexes have risen slightly.

Looking at the brand type index: In January , the import & luxury brands, mainstream joint venture brands, and domestic brands index rose slightly month-on-month.

Market prediction for next month: February is a traditional off-season for sales, and it is also a vacuum period after the Spring Festival. Affected by the recurrence of the epidemic, the short-term market support is insufficient. In addition, the chip problem may continue to be resolved in the second half of this year. It is estimated that the sales volume of full-caliber passenger cars in February will be about 1.4 million units, a month-on-month decrease of about 40% .

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.

Appendix: Automobile Dealer Inventory Early Warning Index Survey Description and Regional Division Standards

1. Survey description of automobile dealer inventory early warning index

The China Automobile Dealers Association proposed the construction of an " inventory early warning system " as early as March 2010 , and began to conduct regular inventory surveys of automobiles and dealers in July 2010. In 2012 , in order to more proactively reflect industry trends, the association built an automobile dealer inventory early warning index after more than half a year of research.

The purpose of the automobile dealer inventory early warning index survey is: first, to grasp the pulse of the market. By investigating the inventory status of automobile dealers of various brands across the country, we can timely grasp the overall status of the industry and predict future market trends; second, to assist in regulatory decision-making. By understanding the changes in dealer inventory, we can provide accurate information for relevant departments to formulate regulatory measures. Third, to monitor operational risks. Timely reflect the fluctuations in production and sales in the automobile market, provide reference for manufacturers to reasonably arrange production plans, and for dealers to formulate marketing strategies and control operational risks.

According to the principle of PMI compilation, the inventory early warning index adopts the method of compiling an extended index, with 50% as the boom-bust line. Anything below 50% is within a reasonable range. The higher the inventory early warning index, the lower the market demand, the greater the inventory pressure, and the greater the operating pressure and risk.

In order to enhance the forward-looking and predictive functions of the inventory early warning index, the ideas and methods of constructing the PMI index are used for reference. The inventory early warning index selects indicators that are closely related to changes in automobile inventory to form a comprehensive index. The relevant indicators mainly include: total demand in the automobile market, 4S store customer volume, transaction rate, price changes, sales changes, inventory changes, changes in the number of employees, working capital status and operating conditions.

The dealer inventory survey this month is mainly conducted on the top 100 dealer groups in China's automobile distribution industry in 2016. It covers more than 1,000 4S stores in most provinces across the country and has a wide range of brand coverage, including 55 major imported, joint venture and independent automobile brands that are mass-produced and sold in the domestic market .

2. Regional division standards

The northern region includes provinces and regions: Beijing, Hebei, Henan, Heilongjiang, Jilin, Liaoning, Inner Mongolia, Shanxi

The southern region includes provinces and regions: Fujian, Guangdong, Guangxi, Hainan, Hubei, Hunan, Jiangxi

The Eastern Region includes provinces and regions: Anhui, Jiangsu, Shandong, Shanghai, Tianjin, Zhejiang

The western region includes the following provinces and regions: Gansu, Guizhou, Shaanxi, Sichuan, Xinjiang, Yunnan, Chongqing, Ningxia, Qinghai, Tibet