AutoBeta(AutoBeta.net)08/11 Report--

As the domestic car market has achieved five consecutive months of month-on-month growth from the collapse in February to recovery, it began to achieve year-on-year growth from April to July this year. However, according to the survey results of "Automobile Dealer inventory" released by the China Automobile Circulation Association in July 2020, the inventory level of automobile dealers still exceeded the standard in July, and the inventory index rose month-on-month for many consecutive months.

The survey results show that the comprehensive inventory coefficient of car dealers in July was 1.91, up 9.4% from the same period last year and 10.0% from the previous month. The inventory level is above the warning line and is expected to continue to rise in August.

The association pointed out that since the off-season of traditional consumption in July, and the weakening support of some favorable policies to the car market, the epidemic and flood conditions have affected consumer travel, making inventory difficult to digest.

However, affected by the epidemic, market consumption has lagged behind this year, and market demand has been basically overdrawn under the stimulation of various promotional activities in the second quarter, and the impact of high-temperature holidays led to a low base in July last year, and the holding of the Chengdu International Auto Show accelerated the recovery of the car market and boosted sales, thus enabling the market to achieve year-on-year growth in July under the traditional off-season.

Passenger car sales in China rose 8.5% in July from a year earlier, according to figures released by the China Association of Automobile Manufacturers. China produced 2.201 million cars in July, up 21.9 per cent from a year earlier; sales rose 16.48 per cent from a year earlier. China produced 100000 new energy vehicles in July, up 15.6 per cent from a year earlier; sales rose 19.3 per cent from a year earlier. From January to July, China's car sales fell 12.7% from a year earlier, and sales of new energy vehicles fell 32.8% from a year earlier.

From the sub-brand type index, the inventory coefficient of high-end luxury and imported brands was 1.66 in July, up 22.9% from the previous month; the inventory coefficient of joint venture brands was 1.96, up 10.9% from the previous month; and the inventory coefficient of independent brands was 2.14, up 3.5% from the previous month. It can be seen that the coefficients of high-end luxury and imported brands, joint venture brands and independent brand garages increased month-on-month in July, and inventory pressure increased.

From the inventory index of the first few car companies can also see increased market pressure, July inventory depth of more than 2.5 months of six brands, of which the highest inventory depth of three are Jaguar Land Rover, Beijing Hyundai, Geely.

Among them, the highest inventory index in July was Jaguar Land Rover, which reached 3.52 well above the industry average, and the car companies that maintained the highest inventories in June and July rose to 3.52 from 2.77 last month. Sales of both Jaguar and Land Rover brands in China picked up further by the end of June, with four consecutive months of month-on-month growth, with June sales up 10 per cent from May, according to Jaguar Land Rover sales data. It is not difficult to see that with the continued growth of the luxury market, Jaguar Land Rover still has a high inventory and is on the edge of the market.

The second highest inventory is occupied by a joint venture car company, with Beijing Hyundai dealers' inventory level reaching 3.07 months in July. Not only Beijing Hyundai, but in May this year, the Association pointed out that the dealer inventories of Beijing Hyundai and Dongfeng Yueda Kia have both exceeded 2.5 months, and now inventory levels are rising again, which also shows that in the flagging market environment of the domestic market, it is even more difficult for joint venture brands that are already on the brink of joint ventures.

According to Beijing Hyundai sales, Beijing Hyundai sold 44023 units in June, up 10 per cent from a month earlier. From January to June, terminal sales totaled 235284 units, and since March this year, terminal sales have increased for four consecutive months.

Different from the first two car companies on the list, Geely, which ranks third in July, is the domestic mainstream independent brand, with an inventory index of 2.97, which means that Geely's brand inventory will be maintained for nearly three months. this is also a rise after Geely won the highest inventory index of the month with an inventory index of 2.29 in May.

According to Geely's sales report, new car sales reached 105218 in July, up about 15% from a year earlier, with cumulative sales of 6.35664 billion from January to July, down about 14% from a year earlier. Sales have soared for many months in a row, becoming the car company with the highest sales of its own brands in the first half of the year.

High inventory often reflects the decline in corporate sales, but judging from the recent market performance, most car companies are showing signs of growth. Therefore, this also reflects that car companies in the pursuit of sales target completion rate, may take the price of increasing dealer inventory pressure, but it is not conducive to sustainable development. Therefore, the association suggests that in the post-epidemic period, dealers should rationally estimate the actual market demand and reasonably control the inventory level according to the actual situation, so as to prevent excessive inventory pressure and lead to operational risks.

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