China’s Vehicle Inventory Alert Index drops 8.3 percentage points YoY in Oct.

China's Vehicle Inventory Alert Index (VIA) stood at 54.1% in October, which rose 0.1 percentage points compared to the previous month, while dropped 8.3 percentage points over the previous year, according to the China Automobile Dealers Association (CADA). The VIA in the month was still above the official warning threshold.

The months of September and October are traditional selling season for car shopping in China. According to the China Association of Automobile Manufacturers (CAAM), China auto sales in September grew 12.8% year on year to 2.565 million units, the highest monthly volume created so far this year.

In October, the auto sales is expected to sustain a sound growth thanks to the governmental incentives, the stimulus led by National Day Holiday and Mid-Autumn Festival as well as the supporting polices offered by automakers, said the association.

Nevertheless, the auto sales in some rural areas of China North will be somewhat curbed as people were busy with harvesting crops. Besides, the auto consumption in Xinjiang will be pressured by the resurgence of the coronavirus in the short run.

In the fourth quarter of the year, auto dealers will be saddled with heavier inventory and slower capital recovery as they are striving to fulfill the full-year wholesale target set by OEMs, said the CADA. To achieve higher retail sales, dealers are likely to further cut car prices, leading to fewer profits for dealerships.

The VIAs of the imported & luxury brands reached 52% in October, 4.7 percentage points higher than the month-ago level. Notably, the index of the mainstream joint-venture brands and China's self-owned brands dropped 2.3 and 1.3 percentage points month on month respectively to 55.3% and 53%.