China Automobile Dealers Association: The comprehensive inventory coefficient of automobile dealers in February was 1.74, an increase of 26.1% compared to the previous month.

On March 10th, the China Automobile Dealers Association released the results of the "Automobile Dealers Inventory" survey for February 2024: the comprehensive inventory coefficient of automobile dealers in February was 1.74, an increase of 26.1% month-on-month and a decrease of 9.8% year-on-year. The inventory level is above the warning line. I. Inventory coefficient decreased year-on-year and increased month-on-month in February February is traditionally the off-season for consumption. Due to the impact of the long Spring Festival holiday, demand for car purchases was released earlier, and passenger car production and sales slowed down. After the festival, car companies started a wave of price reductions, including direct discounts, subsidies, and launching lower-priced models, causing significant price fluctuations at the consumer end and increasing consumer wait-and-see sentiment. Some consumer demand for car purchases may be postponed to be released at the March spring car show, so the sales in February were lower than expected. As manufacturers began to accelerate production recovery in the second half of February, dealers entered the replenishment stage in the fourth week after the holiday, resulting in a slight increase in inventory levels. It is estimated that the terminal sales volume of passenger cars in February is about 1.15 million units, and the total inventory of dealers is around 2 million units. Although the inventory coefficient is above the warning line, the total inventory level is relatively low. II. Inventory coefficient increased for high-end luxury, imported, joint venture, and domestic brands The inventory coefficient for high-end luxury & imported brands was 1.57, a 53.9% increase month-on-month; the coefficient for joint venture brands was 2.06, a 38.3% increase month-on-month; and the coefficient for domestic brands was 1.62, an 11.7% increase month-on-month. III. Brands with the highest inventory depth in February Due to reasons such as dealers replenishing inventory at the end of February and sales volume falling short of expectations, the inventory levels for most brands are relatively high. The brand with the highest inventory depth this month is not disclosed. IV. Cautiously anticipate market demand in March 2024 and control inventory reasonably In March, spring car shows will be held in various regions, and many new cars will be launched. Car companies and dealers are gearing up for the March car market, increasing promotional efforts. Companies like BYD, Changan Qiyuan, and Xiaopeng have announced price cuts, leading to some market wait-and-see sentiment. However, with the introduction of new subsidy policies in various regions, it is expected to continue driving the recovery of the automotive market demand. Recently, the 2024 government work report of the National People's Congress and Chinese People's Political Consultative Conference proposed to stabilize and expand traditional consumption, encourage and promote the replacement of old products with new ones, boost the consumption of smart, internet-connected, and new energy vehicles, electronic products, and other consumer goods. The State Council executive meeting approved the "Action Plan for Promoting Large-scale Equipment Updates and Replacement of Consumer Goods," which aims to promote a new round of large-scale equipment updates and replacement of consumer goods, actively carry out the replacement of old products with new ones such as cars, and create a scale effect of replacement. Currently, Shanghai, Shandong, Chongqing, and other places have prioritized the introduction of relevant policies, and more than 30 car companies are actively responding by launching subsidies for replacing old products with new ones. This policy is a major positive development for the automotive market. With the support of policies, the Chinese automotive market is expected to strengthen further this year. It is estimated that consumer promotion policies such as replacing old products with new ones and scrapping updates will stimulate an increase of around 1.5 million in the passenger car market. The China Automobile Dealers Association suggests that dealers should assess the actual market demand rationally, control inventory levels reasonably according to the actual situation, to prevent excessive inventory pressure, and avoid operational risks.