Automobile Dealers Association: Dealers in April the pressure is not reduced, may the car market or inflection point

21st Century Business Herald reporter Du Qiaomei reported from Beijing

On May 6, the latest issue of the "China Automobile Dealers Inventory Alert Index Survey" VIA (Vehicle Inventory Alert Index) released by the China Automobile Dealers Association showed that the inventory warning index of Chinese automobile dealers in April 2022 was 66.4%, up 10 percentage points year-on-year, up 2.8 percentage points month-on-month, the inventory warning index was above the boom-bust line, and the automobile circulation industry was in a slump range. The severe epidemic situation has led to a cold market in the automobile market, and the crisis in the supply of new cars and the lack of market demand have combined to affect the automobile market, and the situation of the automobile market in April is not optimistic.

From the perspective of sub-indexes, the inventory, market demand, average daily sales, employees, and operating conditions indexes in April fell month-on-month. In April, the upstream automobile industry chain was affected by the epidemic and stagnated, the downstream terminal was affected by the closure of dealers and the price increase of some models, the overall market demand was weak, dealers faced the dilemma of declining profitability and tight funds, some dealers cut salaries and laid off employees, and the employee turnover rate was high.

From the perspective of regional indexes, the national total index in April was 66.4%, the northern index was 68.7%, the eastern index was 69.8%, the western index was 63.0%, and the southern index was 64.1%.

In terms of the index of different brands, the index of imported & luxury brands, mainstream joint venture brands and independent brands rose month-on-month in April. The market demand for joint venture brands has shrunk more than expected, and the decline in sales has led to a higher inventory warning index.

Dealer pressure continues unabated

In April, the epidemic situation in various places has not been effectively contained, and the prevention and control policies in many places have been upgraded, resulting in the phased suspension and production reduction of some car companies, and the transportation obstruction has affected the delivery of new cars by dealers. Factors such as rising oil prices, the continuous impact of the epidemic, and the increase in the prices of new and traditional energy vehicles have caused consumers to expect price cuts, while the demand for car purchases under the risk aversion mentality will be delayed. The weakening of terminal demand has also further inhibited the recovery of the automobile market.

The Circulation Association expects full-caliber narrow passenger car terminal sales to be around 1.3 million units in April, a decrease of about 15% month-on-month and a year-on-year decline of about 25%.

In addition, due to the impact of the epidemic, dealers in 34 of the 94 cities surveyed in the survey have closed stores. Among the dealers who have closed their stores, more than 60% of them have closed their stores for more than one week, and the epidemic has seriously affected their overall operations. Affected by this, dealers can not hold offline auto shows, the pace of new car listing is completely adjusted, and the effect of online marketing alone is limited, resulting in a serious decline in passenger flow and transactions. At the same time, the transportation of new cars is limited, the pace of new car delivery is slowing down, some orders are lost, and the turnover of funds is tight.

In this survey, dealers feedback that in order to cope with the impact of the epidemic, manufacturers have successively introduced support measures, including reducing task indicators, adjusting assessment matters, strengthening online marketing support, and providing epidemic prevention-related subsidies. At the same time, dealers also hope that local governments will give relevant policy support, including tax reduction and fee reduction and interest discount support, encourage automobile consumption policies, provide car purchase subsidies and purchase tax reductions.

"Predicting the inventory coefficient in May from the inventory warning index still shows a month-on-month upward trend." The distributors noted that dealers believe that market demand in May is a state of decline. However, if the epidemic can be better controlled in May, May will also become a turning point for sales to be good.

However, on the whole, the epidemic prevention and control has been tightened, the production, transportation and terminal sales of car companies have been greatly affected in April, the pace of new car listing has slowed down after the extension of vehicles in many places, the current income of consumers has decreased, and the epidemic risk-averse mentality has led to a lack of consumer demand in the automobile market, affecting the growth of automobile sales, and the impact in the short term may be greater than the supply chain difficulties. Due to the complex market environment, the association expects the market to perform slightly better in May than in April, but not as much as in the same period last year.

Consumer demand is weak

"Affected by multiple factors such as the continuous multi-point outbreak of the epidemic, the rise in international commodity prices, and the surge in supply chain risks, the new downward pressure on the auto market has further increased and exceeded expectations." The National Bureau of Statistics just announced the total social consumption in the first quarter of 108659 billion yuan, an increase of 3.3% year-on-year, the total amount of automobiles was 1,073.9 billion yuan, down 0.3% year-on-year, the sharp decline in automobile consumption has significantly dragged down the zero growth rate of the society; the first quarter of the ministry of finance announced the vehicle purchase tax reached 82.5 billion yuan, down 20.4% year-on-year, showing a downward trend for 8 consecutive months. Especially since entering March, many automobile companies at the production end have announced the suspension or reduction of production, and the price increase of automobiles, especially new energy vehicles, has become a common phenomenon in the industry; the market passenger flow has shown a sharp downward trend, and the final consumer demand is narrow. The Central Economic Work Conference proposed that the mainland's economic development is facing the triple pressure of demand contraction, supply shock and weak expectations, which is particularly prominent in the automobile market. A few days ago, Xiao Zhengsan, vice president and secretary general of the China Automobile Dealers Association, said at the Blue Book Forum of Chinese Automobile Dealers.

From the consumer side, the automobile consumption index in April was 71.8. Judging from the sub-indexes that make up the automobile consumption index, the demand sub-index in April 2022 was 72.6; the entry sub-index was 80.8, and the buy sub-index was 87.2, all higher than the previous month.

The circulation association pointed out that the factor that has the greatest impact on the automobile market at present is the epidemic. This round of epidemic broke out in many places in March, and the epidemic prevention and control situation in Northeast China, Jiangsu, Zhejiang, Shanghai and other places as an important town of the automobile industry is even more severe. Affected by the epidemic prevention and control, logistics have been blocked, the production rhythm of some parts and components enterprises has been disrupted, and there has been a shortage of parts supply, resulting in the suspension of production of vehicle production bases in central China, south China, northeast China and other places. At the same time, dealers in the sealed areas have also stopped operating activities, residents' income and consumer confidence have been affected to a certain extent, consumer demand has declined, and automobile production and sales have declined sharply.

However, as enterprises resume work and production one after another, logistics are gradually smooth. As of the end of April, most of the automobile production plants and automobile industry chain enterprises in Jilin and Shanghai, which have been seriously affected by the epidemic, have resumed work and production, and the business activities of dealers have gradually been carried out, and the production and sales of automobiles have improved.

Multiple measures to stimulate consumption

It is worth mentioning that in order to boost the automobile market, the relevant departments of the state and local governments have successively introduced positive policies to stimulate automobile consumption.

On April 20, the General Office of the State Council issued the Opinions on Further Releasing Consumption Potential and Promoting the Sustained Recovery of Consumption, which requires a steady increase in bulk consumption such as automobiles, and no new car purchase restriction measures in various regions, and at the same time requires that the purchase restriction areas gradually cancel the purchase restriction on automobiles according to local conditions, and promote the transformation of consumer goods such as automobiles from purchase management to use management.

In terms of used cars, with the gradual removal of the resistance of the relocation restriction, tax and property rights registration systems, the potential of used car trading is expected to be released in the near future.

In order to encourage the consumption of new energy vehicles, on April 29, the Guangdong Provincial Development and Reform Commission issued the "Announcement on The Purchase Subsidy Activity of New Energy Vehicles", from May 1 to June 30, 2022, individual consumers who purchase new energy vehicles within the scope of the "Guangdong Province Automobile Trade-in Special Action" to promote new energy vehicles and complete the registration of motor vehicles in the province can apply for a comprehensive use subsidy of 8,000 yuan / vehicle for new energy vehicles. From May to June, on the basis of the original, Guangzhou added 30,000 car purchase indicators and Shenzhen added 10,000 car purchase indicators to better meet the needs of the masses to buy cars; and stipulated that all localities must not introduce measures to restrict car purchases.

The introduction of a series of policies has played a good role in the recovery of the automobile market. However, the circulation association believes that the epidemic will still have a certain impact on the automobile market in May, and it will take a certain amount of time for automobile production, transportation, spare parts supply, and the improvement of residents' consumer confidence. The Dealers Association expects vehicle sales to increase in May compared to April, but not as much as in the same period last year. However, due to the uncertainty of the epidemic, there may be fluctuations.

However, for the full year of 2022, the industry remains optimistic.

"At the end of last year, it was predicted that 2022 is expected to continue the positive growth trend in 2021, and it is expected to achieve production and sales of more than 28 million units throughout the year." However, the impact of the epidemic in the first quarter of this year exceeded expectations, especially in March, when the decline of the entire auto market was very obvious. However, the impact of the epidemic is short-lived after all, and the automotive market is expected to resume growth in the second half of the year, and it will still be able to achieve positive growth this year. ”

Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, expects that new car sales are expected to reach 27.5 million units this year, used car trading volume will exceed 20 million units, new energy vehicles are expected to reach a scale of 5 million units, and exports will continue to rise this year, reaching the level of 2.8 million units.