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Auto Dealers' Inventory Warning Index Drops to 58.9% in March

Date:04-08 15:44 Source:21ST CENTURY BUSINESS HERALD Authour: Wang Xin

The Chinese auto dealers inventory warning index stood at 58.9% in March 2016, down 0.7 percentage points from February but still above the warning line. Dealers' operations are expected to get back to normal in April.

Auto Dealers' Inventory Warning Index Drops to 58.9% in March

"The general auto demand and market situation shows that the effect of Spring Festival in February did not affect auto sales in March, the market has got back to normal, and sales structure, market demand and other indicators are basically the same as in April." said Hui Yumei, vice president of Auto DS, at the monthly analysis meeting of China Automobile Dealers Association (CADA) on April 5.The "survey of Chinese auto dealers' inventory warning index" conducted by CADA, pegged the index at 58.9% in March 2016, down 0.7 percentage points from February but still above the warning line.

Compared with February, when the auto market was affected by Spring Festival, there was a return to normal in March and sales obviously increased.

"Because of the fall in sales in February, backed-up inventory had to be absorbed in March, so the inventory index increased notably this month and dealers came under a lot of pressure," said Hui.

The total demand index and inventory index in March were 46.9% and 69.2% respectively, up 24.1 and 13.2 percentage points month-on-month. Meanwhile, dealers' working capital in March was slightly tighter than in February. Market demand in April is expected to be on a par with March, indicating mediocre dealer operations in general.

"In terms of capital use, some dealers will proactively increase their inventory because they have to get ready for the auto sales surge in May, so capital will be quite tight, and dealers' inventory will increase slightly," said Hui.

Dealers should be rational in judging the market, keep their inventory under reasonable control, and reduce operational risks caused by inventory changes. "Dealers' operations are relatively stable at the moment and are expected to get back to normal in April," said Xiao Zhengsan, secretary general of CADA.


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