China’s Vehicle Inventory Alert Index in July almost remains flat

China's Vehicle Inventory Alert Index (VIA) stood at 62.7% in July, which climbed 5.9 and 0.5 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 July represented decrease due to the traditional slack season for car shopping, the overdraft of consumption demands led by the sales promotions offered in the second quarter, the torrential rain and floods hitting China's southern China and the pandemic relapse in Xinjiang.

Although the overall market performance is not that good, the auto sales in July only showed slight decline over a month ago, and basically remained flat over a year ago thanks to the increasing demands resulting from the launch of local motor shows and the intensive roll-out of new products and the relatively low year-ago base number, said the CADA.

The VIAs of the imported & premium brands, the mainstream joint-venture brands and China’s self-owned brands reached 58%, 65.3% and 61.2% last month, rising 5.3, 6.4 and 4.6 percentage points from a month earlier. In July, all kinds of brands were faced with heavier inventory pressure as the stimulus effect of car shopping incentives was abating in July, the rampant floods took place in many regions and OEMs overstocked dealerships.

Many OEMs have not reduced the annual sales targets they set for dealers, which means dealers must double their efforts in the second half of the year to achieve the goal. Thus, lots of dealerships opt to increase sales by largely reducing car prices, so that the profits they can earn would be decreased. The association expects the mark performance to get back to normal in the third quarter, while the auto sales are likely to drop seasonally in August.