December expected to add cheer to dealerships

Business conditions for vehicle dealers were affected by the recent COVID-19 outbreaks, resulting in increased car inventory. But the situation is expected to improve this month, according to an industry association.

China’s vehicle inventory alert index, which reflects the inventory level on automobile dealers, rose 9.9 percentage points year-on-year in November to 65.3 percent, data from the China Automobile Dealers Association showed on Thursday.

The index typically is lower than 50 percent when the market is healthy. A higher reading indicates weaker market demand, higher inventory pressure and greater risks.

Lang Xuehong, deputy secretarygeneral of the CADA, said that the delay of local auto shows and promotions, and temporary closure of dealerships because of pandemic controls restrained consumer demand and purchase.

The association estimated that the retail sales of passenger vehicles could be around 1.7 million units for November.

A survey of the CADA shows that 41.2 percent of dealers temporarily closed stores and 73 percent said they might be unable to complete their sales targets.

Most of the dealers predicted the outlook will stay gloomy because of the uncertainties of the pandemic.

Lang said it’s hard to forecast the whole-year performance due to a complex and volatile market environment, which is different from previous years.

As the favorable purchase tax policy and new energy vehicle subsidies are drawing to an end this year, potential car buyers may rush to seize favorable prices, Lang added.

The country’s leading industry association is optimistic about total sales this year. Chen Shihua, deputy secretary-general of the China Association of Automobile Manufacturers, said the passenger vehicle segment has seen a rapid rise since June, when the central authorities came up with the purchase tax subsidy.

Chen said the segment is expected to drive total sales in the country this year to exceed 27 million units, which will mark a 3 percent rise from 2021.

Others are even more optimistic about the market performance. Cui Dongshu, secretary-general of the China Passenger Car Association, said at an industry forum in November that the industry is expected to reach a year-on-year growth of 14 percent during the last quarter. Whole-year sales are expected to exceed 28 million units and see a 7 percent growth.

The CAAM data show that total deliveries in the first 10 months reached 21.98 million units, up 4.6 percent from the same period of last year.