According to the Epoch Times, the latest issue of the “China Automobile Dealer Inventory Alert Survey” shows that the mainland’s automobile inventory index in May is above the inventory warning line. The car inventory has exceeded the inventory warning line for 17 consecutive months.
The China Automobile Dealers Association (China Automobile Association) recently released the latest issue of the “China Automobile Dealer Inventory Alert Survey.” The survey showed that the automobile dealer inventory warning index was 54.0 percent in May, down 7 percent from the previous month and up 0.3 from the same period last year. Since 2018, mainland car sales have declined for 10 consecutive months, and dealers’ revenue targets have fallen sharply. The high inventory has become a major concern.
According to Changjiang Business Daily news, the “Report on the current living conditions of China’s auto dealers and related report recommendations” that the China Automobile Association issued show that the current inventory in the industry is more than 3 million units, the equivalent to two months of sales. The cost of carrying a high inventory has eroded the gross profit on the new cars. In addition, the implementation of emission standards for phase VI also increased the dealers’ pressure to clear the inventory of cars made using the emission standard of phase V.
According to the survey of the Automobile Association, in June, the automobile market is about to enter the off-season. Therefore, the market demand in June is expected to decline compared with that in May. The automobile market will continue to be sluggish and the pressure on dealers will further increase.
The article quoted comments stating that the decline in automobile sales shows that the economic environment is also slowing down. For the mainland, the causes are the economic downturn and the expected decrease in personal income. In addition, the sharp rise in the price of necessities, such as pork and fruits and vegetables, has caused the people’s monthly living expenses to rise. When people revise their spending plans, they have to delay or eliminate spending on big expenditures such as tourism and car purchases.
Source: Epoch Times, June 9, 2019