China’s Auto Dealers’ Inventories Continue to Increase image

In the first half of 2012 the inventories of the 40 auto dealers in China reached 29.7 billion yuan ($4.70 billion).

This inventory increase is a clear sign that China’s auto market has slowed down. Domestic automakers have reported higher inventories than the imported and joint-venture brands. From January to June, the inventory of Wuhu Yaxia Automobile, which is a domestic car dealer, rose 60.84% compared with the same period last year.

“The sales competition between car dealers and manufacturers is very intense,” said Cui Dongshu, deputy secretary-general of the China Passenger Car Association. “Overstocking at dealers may be a big threat to automakers.”

In July light vehicle sales reached 1.38 million units, up 9% from the last year, with 1.05 million passenger vehicles sold, an increase of 10% and 320,000 light commercial vehicles, up 6%. SUV sales increased 30% and the minicar segment saw a decline of 14%. FAW-Volkswagen led the passenger market with 115,500 units in July, up 26%.

Shanghai GM and Shanghai-VW were on the second and third place with 102,000 units, up 14%, and 94,000 units, up 22%, respectively. But China keeps loosing ground in the domestic market, as local automakers’ passenger vehicle sales during the first half of the year decreased 28.2%, which means a 2.2% drop from the same period last year.