China’s Vehicle Inventory Alert Index in June edges up 2.6 percentage points MoM

China's Vehicle Inventory Alert Index (VIA) stood at 56.8% in June, which climbed 2.6 and 6.4 percentage points compared to the previous month and the previous year respectively, according to the China Automobile Dealers Association (CADA).

Both footfall and auto sales of dealerships in June represented growth thanks to the increasing launch of motor shows, the sales promotion offered during the “6.18” mid-year online shopping festival, as well as some preferential policies and incentives rolled out by local governments, automakers and dealers. However, the market demands were somewhat overdrawn, said the association.

To fulfill the first-half sales goals set by OEMs, a number of dealers opted to spur deliveries by decreasing prices, so that the unit profit per car slid, leading to fewer incomes to dealers, according to the CADA.

The overall market faced a sales slowdown due to the decline in dealer showroom traffic which resulted from the flood disasters led by continuous torrential rainfalls taking place in the late June in such places as Zhejiang, Fujian, Jiangxi, Hunan, Guangdong, Guangxi, Chongqing and Guizhou.

The VIAs of the imported & premium brands and the mainstream joint-venture brands reached 52.7% and 58.9% in June, rising 0.4 and 5.5 percentage points from a month ago. China's self-owned brands posted lower inventory level as their sales were boosted in May by OEMs' policies.

Dealers are expected to undertake higher inventory pressure in July by reason of sliding demands for the traditional slack season and increasing wholesales required by OEMs, said the association.