China Automobile Dealers Association: China's auto dealer inventory warning index was 52.9% in May 2021

China Automobile Dealers Association: China's auto dealer inventory warning index was 52.9% in May 2021

On May 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 May 2021 was 52.9%, a year-on-year and month-on-month decrease of 1.3 and 3.5 percentage points respectively. The inventory alert index is above the boom-bust line.

The auto market was relatively stable in May, but it did not meet the ideal expectations. The May Day holiday partially replaced the Spring Festival holiday and travel back home, which in turn affected the number of store visits and transaction volume. After the holiday, due to the recurrence of the epidemic in many places, extreme weather in the south, and busy farming in some areas, the market demand was insufficient, and sales were basically the same as in April.

Chip shortages have led manufacturers to implement production cuts. Some dealers said that there is a shortage of supply for popular models, and the extended vehicle delivery cycle has led to unstable sales. In addition, funds are trapped in vehicles on the road, resulting in tight turnover. In addition, the cost of raw materials has risen, and manufacturers have tightened their promotional policies, which has increased the operating pressure on dealers.

From the perspective of sub-indices: In May, the inventory, employees, and operating conditions indexes decreased month-on-month, while the market demand and average daily sales index increased month-on-month. The market was stable in May, the chip shortage led to a decrease in supply, a decrease in dealer inventory, and a slight rebound in market demand and sales.

From the regional index situation: In May, the national total index was 52.9%, the northern region index was 53.3%, the eastern region index was 54.5%, the western region index was 58.3%, and the southern region index was 54.4%. In May, the demand for the automobile market increased, but the chip shortage led to a decrease in supply, order delays, and the inventory warning index of each region decreased.

Looking at the brand type index: The import & luxury brand index fell slightly in May compared with the previous month, while the domestic brand index and mainstream joint venture brands fell compared with the previous month.

The auto market in May was lower than expected, and in June the auto market entered the off-season. Dealers are facing a sales sprint in the second quarter and the first half of the year. Affected by the shortage of chips and the insufficient supply, it is expected that dealers will mainly sell at guaranteed prices, and the intensity of price wars will be lower than in the same period of previous years.

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.

<<:  China Association of Automobile Manufacturers: The added value of automobile manufacturing industry increased significantly year-on-year in January-February 2021

>>:  China Automobile Dealers Association: China Automobile Consumer Reputation Index Report in May 2021

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