China Automobile Dealers Association: In February, the inventory warning index for Chinese automobile dealers was 64.1%, a year-on-year increase of 6 percentage points.

On February 29th, the latest "China Automobile Dealers' Inventory Alert Index Survey" released by the China Automobile Dealers Association showed that in February 2024, the inventory alert index of automobile dealers in China was 64.1%, an increase of 6.0 percentage points compared to the same period last year and an increase of 4.2 percentage points from the previous month. The inventory alert index is above the balanced line, indicating that the automobile distribution industry is in a downturn. Due to the reduction in working days in February and the Chinese New Year holiday, new car sales were mainly concentrated before the holiday, with a significant decline in new car sales and customer traffic in the second and third weeks of February. Some dealerships launched activities such as "open during the Spring Festival" or limited-time discounts and financial subsidies. Most 4S stores had showrooms open during the holiday, but test drives and car purchases were slightly delayed during the Spring Festival. This year, from the small year to the fifteenth day of the first lunar month, all fall in February, making the impact of the Spring Festival higher than in previous years. In addition, heavy snow and freezing rain in provinces and cities such as Henan and Hubei before and after the Spring Festival reduced travel, leading to slightly lower retail sales of cars in February than expected. According to feedback from dealers, 71.5% of dealers believe that the demand and sales volume in the car market in February did not meet expectations, mainly due to factors such as overdrawn sales from the end of last year, adverse weather conditions, and a withdrawal of terminal discounts from high-end brands, leading to a strong wait-and-see sentiment among consumers. Some dealers cleared inventory before the Spring Festival and adjusted the pace of car purchases in February, easing inventory pressure. However, due to a decrease in customer traffic in February, sales revenue decreased, price competition intensified, and dealers still faced significant cash flow pressure. In terms of specific index trends: The number of employees index increased compared to the previous month, while the inventory, market demand, average daily sales, and operational condition indices decreased. In terms of regional indices: The national index in February was 64.1%, with the North index at 63.8%, East index at 65.9%, West index at 55.9%, and South index at 67.7%. In terms of brand type indices: The luxury and imported brand indices increased compared to the previous month, while the joint venture and domestic brand indices decreased. Looking ahead to the market next month: Some regions will kick off the spring car exhibitions in March, with many new car launches scheduled after the holiday, leading to expectations of steady growth in market demand and sales volume. Looking at the first quarter of the car market, a new round of price cuts after the holiday will bring about growth in customer orders, providing some assurance for transaction volume in March. The China Automobile Dealers Association advises that with increased uncertainty in the future automobile market, dealers should assess actual market demand rationally, control inventory levels reasonably, and avoid excessive inventory pressure that could lead to operational risks.