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Only 8.2% of vehicle dealerships in China anticipate a strong market this month, a decline from 9.9% in November, marking the second-lowest level this year after July’s 8.1%. The Vehicle Inventory Alert index for Chinese auto dealers registered at 55.6% last month, up from 52.6% in October and 51.8% a year earlier. A figure exceeding 50% indicates a downturn in overall auto circulation prosperity.
The percentage of dealers expecting poor market conditions increased to 20.3% this month from 17.7% last month. The survey reveals that approximately 80% of dealers held a pessimistic outlook on the market last month, believing their performance fell short of expectations.
Dealers are confronting several challenges, including a decline in customer traffic, heightened cautiousness leading to reduced demand, and shrinking profit margins on new vehicle sales. Additionally, some manufacturers have raised sales targets to boost year-end results, further aggravating inventory backlogs and liquidity issues.
The end of China’s policy that exempted new energy vehicles from purchase tax next year, followed by a halved tax rate, could revitalize consumer interest this month, according to experts. Nonetheless, factors such as sales backlogs from peak months like September and October and stricter trade-in policies in certain regions have dampened this potential, resulting in a less-than-expected increase in demand despite the expiration of NEV purchase taxes and the conclusion of large-scale equipment upgrades and trade-in programs.
Dealerships are advised to conduct a rational assessment of actual market demand based on their specific circumstances. They should also focus on promoting trade-in and scrappage renewal policies, enhance services to boost consumer confidence, prioritize cost reduction and efficiency improvements, and remain vigilant against operational risks.
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