China's vehicle inventory alert index in June 2023 grows YoY, but edges down MoM

Shanghai (Gasgoo)- China's vehicle inventory alert index (VIA), which reflects the inventory pressure on automobile dealers, dropped 1.4 percentage points month on month in June 2023, according to the China Automobile Dealers Association (CADA).

The VIA stood at 54% last month, climbing 4.5 percentage points from the previous year.

The index in June 2023 was still above the official warning threshold (50%).

The auto market experienced a modest recovery in June. Boosted by the "618" shopping spree and the Dragon Boat Festival, combined with manufacturers and dealers' mid-year sales targets, transaction rates improved due to increased discounts.

In addition, from the beginning of June, both central and local governments implemented enhanced consumption stimulus policies, such as the Ministry of Commerce's "Hundred Cities Joint Automotive Consumption Promotion" and the "New Energy Vehicles Promotion in Thousands of Counties and Towns" campaigns. These measures helped accelerate the release of auto consumption demand, leading to a better-than-expected performance of the auto market in June.

It is estimated that passenger vehicle retail sales reached around 1.85 million units in June, showing a slight month-on-month increase, said the CADA.

In June 2023, the VIAs of mainstream joint-venture brands stood at 54%, edging up only 0.1 percentage points over a month ago, respectively. Nonetheless, the imported & luxury brands’ and Chinese locally-owned brands’ monthly index reached 53.5% and 55%, sliding 2.2 and 4.6 percentage points from the previous month, respectively.

The auto market is entering the traditional off-season in July. Several provincial and municipal consumption stimulus policies ended at the end of June, coupled with the strong promotional intensity of May and June, which might dilute potential sales in July and August, added the CADA.