Is the auto market really bottoming out after falling for the first time in a year?

 Is the auto market really bottoming out after falling for the first time in a year?

Cui Dongshu, the Secretary-General of the Federation, told the First Financial and Economic Journalist that in June, the retail sales growth was dominated by the five national vehicles that had to be cleaned up by the end of the month in the six regions. Due to the tight time and heavy task of Guowus inventory digestion, and the continued weakness of terminal consumption since the first half of this year, this has brought tremendous pressure to distributors and manufacturers. Since the beginning of June, manufacturers cooperate with distributors to carry out large-scale targeted promotions, and ultimately achieve the hard landing of Guoliu handover through all channels, which stimulates the retail market to turn around. In addition, some provinces and municipalities have issued favorable policies for the car market, such as the Implementing Scheme of Improving the Consumption Promotion System and Mechanism in Guangdong Province gradually relaxed the indicators of car roll and bidding in Guangzhou and Shenzhen.

As car sales surged in June, its inventory index also fell sharply. According to the data released by China Automobile Circulation Association, the inventory warning index of automobile dealers in June was 50.4%, down 3.6 percentage points annually, and 8.8 percentage points year on year. Inventory early warning index of automobile dealers reflects the fluctuation of production and marketing in the automobile market, with 50% as the line of prosperity and decline, and less than 50% are in a reasonable range. Lang Xuehong, deputy secretary-general of China Automobile Circulation Association, believes that the inventory has dropped dramatically as a result of vigorous clearance of the five models of Kuquo and semi-annual assessment sprint of automobile enterprises. She also pointed out that although the stock early warning index in June was close to the boom and bust line, it did not mean that the market had recovered. The results of the Automobile Circulation Association survey show that the automobile market demand index and the average daily sales index increase annually, while the inventory index decreases annually, while the employee index and the operating condition index decrease annually.

It is noteworthy that new energy vehicles are also ushering in a sharp rise. According to the data released by the Ride Federation, the wholesale volume of new energy passenger cars reached 134,000 in June, an increase of 38.1% annually and 97.9% year-on-year. From January to June, the total sales of new energy narrow-sense passenger cars in China amounted to 576,000 vehicles, an increase of 65.8% over the same period last year. According to the policy, the three-month transition period of new energy subsidies was officially ended on June 25, 2019, and the local subsidies under the new subsidy policy were also abolished. Reporters learned that facing the expiration of the transitional period of subsidies, consumers began a wave of rush buying for fear of rising prices. In addition, in the downward environment of the automobile market, the new energy automobile companies also promoted the sprint sales before the expiration of the subsidy transition period, thus boosting the sales of new energy automobiles. It is noteworthy that sales of new energy vehicles grew by only 1.8% in May.

Cui Dongshu believes that the growth of car market sales in June does not mean that the car market is warming up. Due to the hot weather and high temperature vacation, the first purchasers car purchase is depressed, and the enthusiasm of purchasing customers is not high. The car market will be colder in July. China Automobile Circulation Association also believes that July is a traditional off-season, the weather is gradually hot, the southern region will enter the rainy season, the volume of passenger gathering will be reduced; before that, Chinas five-car centralized inventory clearance promotion stimulates the market, early overdraft part of demand; in July, the implementation of the Sixth National Standard, car prices may rise, consumers hold a wait-and-see attitude. In the current Sino-US trade war, Chinas tariff increase on products originating from the United States will affect some luxury brands, and overall, the growth factor of the automobile market in July is weak.

The downturn of the automobile market has a greater impact on the independent brand. In June, among the top ten automobile manufacturers in the narrow sense, only SAIC General Motors Wuling and Geely entered the list. In addition, the Sixth National Standard has been implemented in some provinces and cities, while some independent automobile enterprises are still not ready, which accelerates the elimination of the market. According to the data released by the Motor Vehicle Environmental Protection Network, as of June 27, 2019, a total of 2 265 models (4 960 information disclosure numbers) of 4 738,000 vehicles from 102 enterprises had made environmental protection information public for the Sixth Light Vehicle Country. Among them, more than a dozen car companies, including Cheetah, Beiqi Fan Speed, Lifan, Junma, Huatai and Kaiyi, do not have the state-owned six models.

LMC Automobile Market Consulting Co., a research institute, expects passenger car sales in China to drop by 5% throughout 2019. At the beginning of this year, the China Automobile Industry Association also predicted that automobile sales in 2019 will be equal to that in 2018, with a growth rate of 0.

Editorial Responsibility: Li Shuwan

This content is the first financial original, the copyright belongs to the first financial ownership. It shall not be used in any way, including reproducing, abstracting, copying or creating mirrors, without the written authorization of First Finance and Economics. First, financial reserve the right to investigate the legal liability of infringers. For authorization, please contact First Financial Copyright Department: 021-22002972 or 021-22002335; [email protected]


Stock growth in June

In May, the automobile market continued to decline, and the automobile companies promoted the depletion of stock.

Sales of passenger cars fell 17.4% in May from a year earlier to 1.51m in May. Sales of 8.399 million vehicles in the previous May fell 15.2% from a year earlier. New energy vehicles, which had been booming in sales, also started to brake.

Source: First Financial Responsibility Editor: Wang Honggui_NF7326