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China’s Nov. Vehicle Inventory Alert Index remains at alarming level

In November this year, China's Vehicle Inventory Alert Index (VIA), which represents the inventory pressure automobile dealers face, was down by 12.6 percentage points from the year-ago period but up by 0.1 percentage points over a month ago, said the China Automobile Dealers Association (CADA). The VIA, standing at 62.5% last month, is still exceeding the official warning line.

(photo source: CADA)

The conventional peak season near the end of the year and the Double 11 event have helped to increase automobile sales in November. Large-scale auto shows, and the rural consumers' income increase after the fall harvest are contributing to the sales increase. What’s more, the Guangzhou Auto Show has boosted the market demand in the southern region. However, dealers have been offering greater price discounts to sell more cars for year-end dividends, leading to a decline in profitability.

The association said the VIA of the imported & premium auto brands (54.9%) in November decreased 8.8 percentage points over the previous month while those of the mainstream joint-venture brands and China's indigenous brands were both higher than the October number.

Auto dealers will be confronted with more inventory stress since there is only one month left in 2019, and they expect the market in December to outperform that in November. The CADA suggested auto dealers should rationally estimate the market demands and control their inventory, so as to shelter themselves from operational risks of excessive inventory.