China Automobile Dealers Association: China's auto dealer inventory warning index was 60.7% in December 2020

China Automobile Dealers Association: China's auto dealer inventory warning index was 60.7% in December 2020

On December 31, 2020, 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 December 2020 was 60.7%, a slight increase of 0.2 percentage points from the previous month and an increase of 1.7 percentage points from the same period last year. The inventory warning index is above the boom-bust line.

As the year-end sales season approaches, manufacturers and dealers are striving to achieve their annual targets and their promotion efforts remain strong; new local subsidy policies have been introduced one after another, which has a certain stimulating effect on car purchasing demand. In addition, Shanghai and Beijing have respectively introduced new policies such as restrictions on the use of foreign license plates and lottery, which also have a significant boost to the car market in December.

However, in order to achieve the annual task target and get the year-end rebate, dealers have significantly increased channel inventory. Due to price cuts and promotions, the price of new cars has continued to drop, and the profitability of dealers has declined.

From the perspective of sub-indices: The inventory index rose significantly in December, up 11 percentage points from the previous month, reflecting the increasing inventory pressure on dealers. At the same time, the market demand index and average daily sales index rose from the previous month, indicating that market consumer demand and terminal transactions increased from the previous month. However, the employee index and operating conditions index fell from the previous month, and the operating pressure on dealers further increased.

From the regional index situation: In December, the national total index was 60.7%, the northern region index was 61.6%, the eastern region index was 66.1%, the western region index was 65.9%, and the southern region index was 60.7%. The recurrence of the epidemic in some areas has had a certain impact on the customer flow and sales of local dealers.

Looking at the brand type index: In December, the import & luxury brand index and domestic brand index increased month-on-month, while the mainstream joint venture brand index decreased month-on-month.

This year's Spring Festival is relatively late, and some of the consumer demand before the festival is expected to be released in January, diverting part of the car purchasing demand in December, and the tail-end phenomenon of automobile consumption at the end of the year will weaken.

The Ministry of Commerce recently stated that it will introduce new measures from the end of this year to the beginning of next year to focus on expanding consumption of key commodities such as automobiles, encourage relevant cities to optimize automobile purchase restrictions, launch a new round of automobile sales in rural areas and old car trade-ins, create a good consumption environment, etc. It is expected that the new measures will bring sustained benefits to the automobile market.

The China Automobile Dealers Association recommends that in the post-epidemic period, dealers should rationally estimate actual market demand based on actual conditions, reasonably control inventory levels, improve network profitability, strengthen channel risk management, do a good job in fund management, control costs and expenses, and reduce operating risks. At the same time, do not relax epidemic prevention and control measures and continue to implement epidemic prevention and control measures.

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