AutoBeta(AutoBeta.net)08/01 Report--

After China's car sales rebounded in June, outsiders believe that July will enter a sustained downturn, and the early sales overdraft of the country's five price sales will seriously affect subsequent sales. In June, terminal sales were larger than the wholesale number of manufacturers, but in July, manufacturers supplied a large number of national six models one after another, while terminal sales failed to keep up or were consumed in advance, resulting in a backlog of dealer inventory.

According to data released by the China Automobile Circulation Association, the inventory early warning index of car dealers in July was 62.2%, up 11.8% from the previous month and 8.3% from a year earlier. The inventory early warning index is above the warning line, the second highest level of inventory so far this year.

The association believes that some areas experienced five countries to six countries in June, overdrawn consumption ahead of time, recovered prices in July, and sales declined significantly compared with June, resulting in increased inventory pressure among dealers.

In other words, due to the unprecedented price reduction during the five-country-six switching period in June, consumers concentrated on picking up cars, resulting in a significant increase in terminal sales in June, but in fact, the wholesale number of manufacturers still declined. July, which is not optimistic, is the off-season for annual sales. Due to factors such as hot weather and high-temperature holidays from manufacturers, the car-buying environment is in the doldrums, so July over the years is the trough of the market. Coupled with the amazing promotion efforts in the second quarter on the consumption overdraft effect of car buyers in the second half of the year, as well as the general small impact of market concessions on the sixth model, car purchases fell into a trough again in July.

Unprecedented price cuts led to the "prosperity" of the car market in June, which was bought by the blood and tears of auto manufacturers and dealers, and caused a lot of losses. The sales downturn in July highlighted once again, as dealers continued to fall into inventory overstocking.

As China's car sales remain in the doldrums, the China Association of Automobile Manufacturers recently lowered its sales forecast for 2019 at the beginning of the year. It is expected to sell about 26.68 million vehicles in 2019, down 5% from the previous forecast of 28 million.

The downgrade of the sales forecast of the China Automobile Association is based on the depressed overall automobile consumption and purchasing power in the first half of the year, and the result of a sharp drop in sales. From January to June this year, China's automobile production and sales completed 12.132 million and 12.323 million respectively, down 13.7% and 12.4% respectively compared with the same period last year.

From the 12.4% decline rate in the first half of the year to the 5% drop expected for the whole year, the China Automobile Association believes that there is still room for increment in China's auto market in the second half of the year. Do the mainframe factories and dealers recognize this confidence? The price-for-volume Chinese car market has found a way out. Manufacturers and dealers will tighten concessions in the second half of the year, and what will happen to consumers' wait-and-see attitude? There may be more possibilities for China's auto market in the second half of the year.

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