Supply Chain Easing Leads to Inventory Improvement More than 60% of dealers predict that the auto market will now grow positively in 2022

Financial Associated Press (Beijing, reporter Xu Hao) news, the epidemic situation is repeated, chip shortage throughout the year, the end of 2021 the domestic automobile market presented an unprecedented scene.

The China Automobile Dealers Association showed in the latest analysis report that from the overall situation in 2021, the automobile market recovered smoothly in the first quarter; the chip shortage in the second quarter began to affect the supply of automobiles, and the market trend gradually weakened; the chip problem reached its peak in the third quarter, and the automobile manufacturers significantly reduced production to affect the terminal market; the "lack of core" in the fourth quarter eased, the automobile supply tended to be stable, and the market performance was slightly better than that in the third quarter.

"Chips, spare parts, supply chain and other issues still plague most automakers and dealers. The inventory of hot-selling models is too low and the supply is insufficient; the target of unsalable models is not reduced, and the price chaos is becoming more and more obvious at the end of 2021, and the survival status of dealers of various brands is obviously different. Song Tao, deputy secretary general of the China Automobile Dealers Association and secretary general of the brand dealer branch, said.

Inventory performance "hot and cold uneven"

According to the latest issue of the "China Automobile Dealer Inventory Alert Index" VIA (Vehicle Inventory Alert Index) released by the China Automobile Dealers Association, the inventory warning index of automobile dealers in December 2021 was 56.1%, although it fell by 4.6 percentage points year-on-year, but it rose by 0.7 percentage points month-on-month, and the inventory volume has increased.

"From the perspective of inventory, dealers will prepare inventory for the purpose of impulse at the end of the year." Qiu Kai, director of the Industrial Coordination Department of the China Automobile Dealers Association, said that of course, some manufacturers do not rule out the possibility of pressing the dealer for the wholesale volume of the whole year, "so the dealer inventory in December showed a growth trend." ”

However, despite the increase in dealer inventory, the inventory coefficient for the month (inventory factor = ending inventory / current sales) was below 1 for the first time. According to the latest "Market Pulse" report released by the Automobile Dealers Association, under the pressure of year-end task impulse, the industry-wide inventory coefficient was 0.99 in December.

What lowers the overall inventory coefficient of the industry is the uneven performance of each brand at the end of the year. Among luxury brands, Lexus has an inventory factor as low as around 0.3. In addition to Lexus, the inventory coefficient of luxury brands, including BBA and so on, also remained at a low level for the whole of 2021, at 1.09, 11 percentage points lower than the overall level of the industry.

"The 3 Series sells well, selling one almost every day, and if you look at the current car, you can only look at the car booked by others." A sales staff at a BMW 4S store in Beijing told reporters, "Now the discount is even greater than the peak season in September and October, and I couldn't buy a car some time ago." ”

The hot sales and insufficient supply of some joint venture brand models were also the main reasons for pulling down inventory in December. "From the perspective of specific brands, the inventory coefficients of GAC Toyota and FAW Toyota are low this month, which may have an impact on new car sales in January 2022." Song Tao said.

This is partially evidenced by the sales figures. According to the data, Toyota will sell 1.944 million vehicles in China in 2021, an increase of 8.2% year-on-year, becoming the only car company among the three major Japanese brands to maintain positive growth. However, the lack of supply is also one of the factors that the inventory of Toyota's joint venture in China is low.

"A car is hard to find" is being alleviated

On the one hand, the overall inventory is still at a low level, on the other hand, with the approaching of the Spring Festival, the market terminal price has begun to loosen.

"Now at the end of the year, we are rushing performance, and there are certain discounts on the price, and we can talk about it again when we arrive at the store." A FAW-Volkswagen salesperson told reporters. However, at present, FAW-Volkswagen still has insufficient inventory, and some models need to wait about a month to get the existing car.

The "Market Pulse" report shows that under the pressure of year-end task impulse, the industry-wide GP1 (the ratio of the dealer's purchase and sales difference to the terminal invoice price, excluding rebates and derivative income) fell by nearly one point month-on-month in December. "The decline in GP1 from the previous quarter reflects a further increase in the cost of dealers to increase sales." Song Tao analyzed.

Since last year, the shortage of chips has led manufacturers to implement production reduction plans, and some dealers have said that there is a tight supply of hot-selling models, and the extension of the vehicle delivery cycle has led to unstable sales. Coupled with the rising cost of raw materials, the manufacturer's promotional policy has been tightened, and although there is a shortage of supply, dealers still generally feel great pressure.

According to the latest data from AutoForecast Solutions, as of December 19 last year, due to the shortage of automotive chips, global automobile production has been reduced by 10.272 million units, and it is expected to reduce global production by 11.31 million vehicles in 2021. Among them, the Cumulative Production Cut in the Chinese Market was 1.982 million units, and the annual production is expected to be reduced by 2.148 million units.

With the easing of the supply of raw materials such as chips, the supply side of automobiles has continued to improve, and dealer inventories have begun to rise.

"In the third quarter of last year, when the chip shortage was the most serious, the transaction price of dealers generally rose, and although the chip shortage was not completely solved at the end of the year, it has been alleviated and the transaction price has been loosened." Qiu Kai said.

According to the survey results of the Circulation Association, 27.6% of dealers believe that new car sales will increase by 5%-10% in 2022; they think that "0>

"In 2022, the impact of chips will gradually weaken, which will help boost the car market and return the overall domestic car market to the normal development track." Qiu Kai expected.