Gasgoo Munich- China's auto retail sector remained under pressure in March 2026, as the latest survey from the China Automobile Dealers Association (CADA) showed its Vehicle Inventory Alert Index (VIA) climbing to 57.5%. The reading, up 2.9 percentage points year-on-year and 1.3 percentage points from February, stayed above the 50% boom-bust threshold that separates expansion from contraction, signaling continued strain on dealership operations.
End-market demand showed a modest rebound in March after a sluggish start to the year. In January and February, policy transitions and broader uncertainty kept many consumers on the sidelines, resulting in weaker-than-expected retail activity. Momentum began to pick up after the Chinese New Year holiday, with local governments rolling out time-limited consumption vouchers and automakers accelerating new model launches. Against this backdrop, passenger vehicle retail sales for March are estimated at around 1.8 million units.
Despite the demand uptick, dealers continue to grapple with mounting operational challenges. Many report that sales targets set by automakers remain overly ambitious relative to foot traffic, while a growing share of aging inventory is tying up capital. Price inversions—where vehicles are sold below wholesale cost—have become widespread, further eroding already thin margins. Survey data highlights the extent of the strain: over one-third of dealerships are experiencing moderate inventory pressure, nearly a quarter face high pressure, and more than 14% are dealing with severe stockpiles. Only a small minority, just above 12%, report inventory levels within a manageable range.
By segment, the March index of luxury & imported brands, mainstream joint ventures reached 62.4% and 62.5%, which rose 2.5 and 5.7 percentage points, respectively. In the same month, China's domestic brands saw its VIA climb 2.5 percentage points to 50.7%.
Looking ahead, the pace of recovery is expected to moderate in April. Although a combination of policy support—including purchase subsidies, spring auto shows, and intensified discounting to clear inventory—continues to stimulate demand, seasonal factors are likely to weigh on traffic. Rural showroom visits in northern regions typically decline during the farming season, while demand in the south may soften temporarily around the Qingming holiday period.
Dealer sentiment reflects this uncertainty. The survey shows a cautious outlook for the second quarter, with only 35% of respondents expressing optimism, while the majority adopt a neutral or pessimistic stance. Still, as supportive measures continue to take effect, the market is widely expected to stabilize gradually, with incremental improvements likely over the coming months.
