Gasgoo Munich- On September 30, the China Automobile Dealers Association (CADA) released its latest dealer inventory alert index survey. The September index came in at 63.2% — up 8.7 percentage points year on year and 0.9 points month on month, holding well above the 50% boom-bust line.
Image source: China Automobile Dealers Association (same below)
Automakers are flooding the market with new models; dealers are piling on incentives. Yet foot traffic at showrooms is fading and orders are shrinking. Why did the highly anticipated "Golden September" lose its luster?
Why Is the Peak Season Losing Steam?
At 63.2%, the index sits 13.2 points above the 50% threshold — a clear signal that channel inventories are strained and operations are tilting toward contraction. With both annual and monthly readings climbing, the pressure isn't easing; it's building.
The frontline tells a starker story. A CADA survey found that 54.2% of dealers believe this year's "Golden September, Silver October" peak season is noticeably weaker than in past years, while 33.7% say the seasonal boost has essentially vanished. Only 3.6% report an improvement. In other words, nearly nine in ten dealers see this peak season as a disappointment.
Consumers are voting with their feet. Confidence is fragile, price sensitivity is rising, and buying decisions are growing more cautious. Many are postponing purchases to wait for National Day auto shows or year-end promotions, dragging out the sales cycle. With both foot traffic and orders slipping from August, "Golden September" got off to a sluggish start.
The sub-indexes paint an even clearer picture. The market demand sub-index dropped to 23.5% in September from 30.6% in August, while the average daily sales sub-index fell to 28.9% from 32.7%. Over the same period, the inventory sub-index climbed to 51.8% from 48.3%. Demand sliding, stock piling — the data confirms a peak season that isn't peaking.
Zoom out to the full year, and the alert index has lingered above the boom-bust line since January: 59.4% in January, 56.2% in February, climbing to 62.3% in August, and hitting a year-to-date high of 63.2% in September. CADA data shows the dealer inventory coefficient stood at 1.58 in August, keeping channel stock at elevated levels.
Beneath the fading peak season lies a deeper structural shift: the transition from combustion to electric.
Lang Xuehong, deputy secretary-general of CADA, notes that traditional internal-combustion and new-energy vehicle (NEV) retail networks now each account for roughly half the market. NEV showrooms boast slightly better per-store efficiency. As the network undergoes consolidation, NEV outlets are expanding while combustion-brand stores are contracting.
She projects that by the end of the 15th Five-Year Plan, NEVs — including plug-in hybrids — will claim more than 70% of the market, potentially approaching 80%. As the combustion-car base shrinks, it becomes harder for the traditional peak season to move the needle for the broader market.
Market fragmentation is equally stark. Regionally, the September index hit 67.3% in both the North and West, compared with 54.8% in the South. By brand, the domestic-brand index climbed to 66.0%, while luxury and imported brands eased to 59.6% — a patchwork of hot and cold. Taken together, September passenger-car retail sales are estimated at roughly 1.65 million units.
"2026 is a major year for product launches, but the market itself isn't having a big year," Lang said bluntly. Against a backdrop of weakening domestic demand, retail channels are contracting and undergoing structural adjustments. A flood of new supply meeting lukewarm end-market demand is the defining footnote of this "Golden September."
How Can Dealers Break the Gridlock?
The cost of a weak peak season ultimately lands on dealers' ledgers.
CADA's 2025 dealer viability survey shows the share of profitable dealerships plunging to 23.5% from 39.3% in 2024, while the loss-making share swelled to 55.7%. Some 81.9% of dealers face price inversions — where retail prices fall below invoice — with 51.5% reporting gaps exceeding 15%. New-car retail prices are now broadly below dealer cost.
The broader industry is also feeling the chill. National Bureau of Statistics data shows auto manufacturing profits fell 19.5% year on year in the first half to 195.35 billion yuan, with a revenue margin of 3.8%. Profits dropped 20.4% in the first seven months, pushing the vehicle-assembly margin down to roughly 1.5%.
Dealers are squeezed from all sides. Foot traffic and leads keep falling, and closing a deal takes longer. Automakers set high sales targets and bundle slow-selling models, bloating inventories and raising the share of aging stock. Price inversions, per-unit losses, and delayed rebates pile on the profit pressure — and the number of 4S stores exiting the network keeps climbing.
"Dealer operations have deteriorated continuously from 2023 to 2025, with half running in the red," Lang told the 2026 China Auto Forum. With new-car prices inverted, she added, financing and after-sales service alone can't cover the losses — dealers must expand beyond new-car sales.
Where is the way out? CADA urges dealers to size up demand realistically, push government subsidies for trade-ins and scrappage, and rebuild consumer confidence through better service. Cost control and efficiency should top the agenda to fend off operational risks.
Looking ahead to the fourth quarter, October will see a temporary lift from the National Day holiday and auto shows, offering a brief bounce in traffic and orders. Yet the demand release will be concentrated and short-lived, leaving significant pressure for a post-holiday drop. On balance, a modest improvement over September is expected. In the survey, 42.2% of dealers anticipate quarter-on-quarter growth in Q4, 24.1% expect further weakening, and just 2.4% predict a sharp rebound.
Lang struck a similar tone in August. She forecast then that as red tape is cut, subsidies expanded, eligible categories broadened, and quota management refined, the year-on-year drop in domestic auto consumption would narrow significantly in the third quarter. Q4 could match or even exceed last year's level, though the foundation for recovery remains fragile.
The full-year view is even more sobering. Deep contraction is now the consensus: 50.6% of dealers expect full-year sales to fall more than 10%, with 37.3% bracing for a decline exceeding 15%. Only 15.7% anticipate growth.
The fading "Golden September" is a microcosm of a market shifting from expansion to zero-sum competition. When price cuts no longer buy growth, the industry's real challenge is pivoting from chasing volume to demanding quality.
