China’s VIA exceeding official warning threshold

In December, China's Vehicle Inventory Alert Index (VIA), which measures the inventory level of automobile dealers, stood at 59.0%, dropping 7.1 percentage points from the year-ago period and 3.5 percentage points over the previous month, according to the China Automobile Dealers Association (CADA).

As of December, 2019, China's VIA had been exceeding the official warning threshold for 24 consecutive months.

In the year-end spurt, dealers strived to sell as many as possible cars by lowering car prices and offering greater discounts. Besides, the auto shows and the promotion for “Double 12” shopping festival and Christmas to some degree spurred the car consumption, said the association. However, the positive affect on the overall market was quite limited. Compared to the previous years, sales were whittled down due to consumers' weaker demands.

The CADA said the VIA of imported and premium auto brands was 56.5%, up by 1.6 percentage points from a month ago.

Premium brands defied the overall downturn trend with their Jan.-Nov. retail sales jumping 11.5% year on year to 2,003,077 units, according to the China Passenger Car Association. Nevertheless, the number shows that upscale car dealers still faced a relatively high inventory pressure.

On the other hand, both mainstream joint-venture brands (58.4%) and Chinese indigenous brands (61.7%) posted lower VIAs compared to November.

Moreover, the CADA pointed out that the auto sales in January is forecasted to tumble compared with December, 2019 due to fewer workdays and expected fewer new car deals as consumers will return to homeland to visit families or go travel during the Spring Festival Holiday.