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China’s inventory pressure on vehicle dealers softened in January

In January, China auto market continued the downturn with its vehicle outputs and sales dropping 12.05% and 15.76% year on year respectively to 2,365,200 units and 2,367,300 units. However, the inventory pressure on sales dealers has been obviously softened.

The Vehicle Inventory Alert Index (VIA) in January published by the China Automobile Dealers Association (CADA) was 58.9%, a month-on-month decrease of 7.2 percentage points and 8.3 percentage points less than a year ago. It still exceeded an official warning threshold, while means a more relaxed situation than previous days.

Besides, the combined dealer inventory turnover in January was 1.40, falling 12% year on year and shrinking 19% month on month, which was also below the warning line, according to the CADA.

Specifically, the inventory turnover of China-owned car brands, joint-venture brands as well as premium & imported car brands reached 1.67, 1.35 and 1.21, sliding 16%, 21% and 19% respectively over a month ago.

There are only three car brands whose inventory turnover in January surpassed 2 months, namely, Dongfeng Venucia (2.50), SAIC Roewe (2.07) and Zoyte (2.03), 6 brands less than that of the previous month and 18 brands less than last November.

The CADA said most carmakers have not set a clear sales goal in January, thus dealers got less pressure when they place orders. Additionally, dealers promoted their products with some price cuts to clear inventories before the Spring Festival, which was other factor that lessened the inventory pressure.