On June 30, the latest "China Auto Dealer Inventory Alert Index Survey" VIA (Vehicle Inventory Alert Index) released by the China Automobile Dealers Association showed that in June 2024, China's auto dealer inventory alert index was 62.3%, up 8.3 percentage points year-on-year, compared with 58.2% in May, up 4.1 percentage points month-on-month. The inventory warning index is above the boom and wither line, and the automobile circulation industry is in a recession range.
Dealer Inventory Warning Index
The inventory warning index adopts the compilation method of the extended index, with 50% as the boom and bust line. Below 50% is within a reasonable range. The higher the inventory warning index, the lower the market demand, the greater the inventory pressure, and the greater the operating pressure and risk.
The "price war" is in full swing, and dealers are forced into a dilemma
"Now that the market competition is too fierce, luxury brands have even started 5% off promotions, and our life is even more difficult." An auto dealer in a certain region of China complained, "The inventory pressure is high, and it is not profitable to sell cars, but if the loss is greater if you withdraw from the network, it is now difficult to ride a tiger and be in a dilemma." ”
Especially for luxury brands, new energy can only reduce the price if it can't be sold, and a price reduction will directly affect the brand power. For example, dragged down by the huge discount of the EQ series, Mercedes-Benz dealers have suffered serious losses, and the actual price of the Mercedes-Benz EQE, which starts at 478,000 yuan, has dropped to 5~6 discounts; "The prices of BMW and Audi have plunged, falling by more than 50%"
The "price war" of car companies is in full swing, but the inventory pressure and sales pressure are pressed on the dealers. According to the 2023 National Automobile Dealer Survival Survey Report by the China Automobile Dealers Association, in 2023, only 27.3% of domestic auto dealers will complete their annual sales targets, and the dealer loss ratio will be as high as 43.5%. As automobiles enter the new energy era, the traditional 4S store physical store marketing model is gradually changing to the brand direct sales model, coupled with the pressure of car companies and the increase in inventory, which has further led to the difficulty of 4S store operation.
Why did the inventory warning index rise again in June?
On July 1, Fan Yu, deputy secretary-general of the Industry Coordination Committee of the China Automobile Dealers Association, pointed out that the completion of the sales task of dealers in the first half of the year was significantly differentiated, of which 18.4% of dealers have completed the task, 34.8% of the dealers' task completion rate is more than eighty, and 13.5% of the dealers have completed less than fifty percent.
Part of the reason for the increase in inventory can be attributed to dealers' rush to sales, but the main reason is the saturation of the entire market and excess capacity. After decades of development, China's auto market has long changed from an incremental market to a stock market. In the past, there was a market for any car launched, but now it is a matter of shopping around, and the strange things made by car companies may not all be sold, and when the production capacity is greater than the sales volume, the inventory will continue to increase.
summary
July and August are the off-season of the auto market every year, and the inventory warning index may increase slightly compared with June, and the pressure on dealers will continue to increase. Now is the time to fight for strength, those who can't stand it have run away, and those who stay may have a slight turnaround.