Inventory levels for Chinese dealerships still dangerously high

 The Chinese Automobile Dealers Association has released a new announcement that warning levels for dealership inventories were at 53.4% in July, Beijing Business Today reported today. Although that figure is 11.2% less than the previous month, July marks the tenth continuous month where inventory levels exceeded warning thresholds.

Lang Xuehong, deputy director of the CADA’s Industry Coordination Department, explained that decreasing inventories in July was a result of growing demand. Mr. Lang expects that demand to continue to grow into August.

However, when commenting on the general high inventory levels in China, Mr. Lang pointed out that the Chinese automotive market is no longer in the period of rapid growth of the past few years. With consumer demand growth on the whole decreasing, dealerships have seen their inventories increase and profits decline, putting them under a lot of pressure. Dealerships are also having to compete with the rise of new e-commerce platforms, which are rapidly gaining popularity among automobile consumers.

The CADA also released a report on the state of the Chinese used car market in June. According to their statistics, a total of 760,000 used cars traded hands in the market in June, up 2.82% from the previous month. The used car market in June was valued at 44.76 billion RMB ($7.22b), up 2.31% from the previous month. CADA Deputy Secretary General Shen Rong pointed out that the used car market possesses a greater margin of development than that for new cars. Mr. Shen expects a total of 10 million used cars to be traded by the end of 2015.