AutoBeta(AutoBeta.net)10/15 Report--

After a bitter battle in the first half of the year, the auto market has entered a stage of rapid growth in the second half of the year. Passenger car sales have risen for three consecutive months compared with the same period last year, and a number of car companies have also ushered in double-digit monthly sales growth. However, at a time when the overall car market continues to rise and dealer inventory levels decline, these brands are under pressure, with one luxury car company on the list and "at the top".

According to the latest retail sales statistics of the Federation of passengers, the domestic passenger car market achieved sales of 1.912 million vehicles in September, an increase of 7.4% over the same period last year and 12.2% month-on-month growth. Sales rose for the third month in a row. The decline for the whole year narrowed further, with cumulative sales of 12.927 million vehicles from January to September, down 12.5 per cent from a year earlier.

The automobile market continues to pick up, and the inventory level of dealers also drops further. The latest survey of "inventory of automobile dealers" released by the China Automobile Circulation Association in September 2020 shows that the comprehensive inventory coefficient of automobile dealers in September is 1.56, and the inventory level is stable at the edge of the warning line. compared with the first half of the year, the inventory level also dropped sharply.

Even though overall inventories have fallen, inventory levels are still high for some brands that underperform in the market. The association's survey report named three car brands with the highest inventory depth in September.

As one of the representatives of Japanese luxury joint venture brands, Dongfeng Infiniti has successively won the title of "highest inventory brand". According to the report, Dongfeng Infiniti dealer inventory depth reached 2.91 in September, making it the highest inventory brand in the month and well above the industry average of 1.56. It means that according to the terminal sales performance of the current brand, dealer inventory can support nearly 3 months.

In fact, Dongfeng Infiniti also reached the top in August, when its dealer inventory depth was 2.46, the highest of all brands. The inventory problem of Dongfeng Infiniti dealers in 2020 highlights that it has been on the list for many months because of high inventory, further reflecting the hidden risks behind the brand.

Dongfeng Infiniti sold 2604 vehicles in August, down 20.6 per cent from a year earlier to 13265 from January to August, down 33 per cent from a year earlier, according to official figures. Unlike the continued double-digit growth in the overall luxury car market, Dongfeng Infiniti stalled significantly.

Brand promotion is weak and sales decline, Infiniti brand new car introduction has also stalled. In the first half of the year, it was reported that Dongfeng Infiniti will make substantial layoffs, related departments and offices will also be relocated or closed, and will also be "merged" with Dongfeng Nissan to reduce costs. Even if Infiniti responded with "false reports" and "will not withdraw from the Chinese market", the development dilemma has been haunting the Japanese luxury joint venture car company.

The phenomenon of differentiation of second-tier luxury brands is becoming more and more intense. For brands with almost no voice, they will face more severe market challenges in the future. Lincoln brand has achieved sales growth through domestic acceleration, while the market prospect of Infiniti brand in China is still very uncertain.

The second highest inventory brand is Skoda, which has a dealer inventory depth of 2.61 in September, which also reflects the imbalance between wholesale sales and terminal retail sales. With the decline of brand premium and the decline of product competitiveness, SAIC Skoda is gradually being marginalized by the market.

SAIC Skoda brand has been hovering in sales of 330000 vehicles from 2016 to 2018, but as the market ebb and competition intensifies, brand differentiation gradually highlights, Skoda falls into the plight of marginalization. Even though SAIC Skoda has strengthened its SUV product layout in recent years and launched two SUV models, Cormick and Klock, it has not actually brought significant growth to Skoda's sales in China. Skoda continued its downward trend in the first half of 2020, with sales of only 77400 vehicles, a sharp drop of 38.5%. Skoda suffered a more severe blow under the influence of the epidemic.

Price for quantity and price reduction to survive has become the survival style of many marginal joint venture brands in the Chinese market. In April this year, the official downgrade of Auto Skoda was officially announced, and the top official of its nine major cars was reduced by 24500 yuan. Positioning sinking and lowering its posture is also a helpless move for Skoda's development.

The third place in inventory is an independent brand, and the inventory depth of Baojun car dealers was 2.48 in September. Through the change of standards and the launch of a number of new models, Baojun seeks to transform its brand and develop its strength into the mid-range passenger car market.

Baojun brand has launched a number of new cars in the past two years, including RS-5, RS-3, RC-6, RC-5, RM-5, E300, etc., but generally failed to continue the strong market performance of earlier years, and Baojun brand is also facing difficulties in development under the intensification of competition.

SAIC GM Wuling (Wuling + Baojun) sold 60921 domestic passenger cars in September, up 5.3% from a year earlier, but has long fallen out of the top 10 of passenger car manufacturers, and SAIC GM Wuling sold a total of 366355 vehicles from January to September, down 34.8% from a year earlier, according to data from the federation of passengers.

Dealer inventory level can reflect a number of problems, car companies in the pursuit of sales target completion rate, often take the cost of increasing dealer inventory pressure, but it is not conducive to sustainable development. Dealer inventory pressure is increasing, dealers rely on substantial preferential activities to accelerate the digestion of inventory, price for volume to boost the end market, profits are difficult to guarantee. At the same time, the high inventory of dealers also reflects the decline of enterprise sales, and the problem of brand management is highlighted.

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