Automobile Consumption Index Report for June 2024

The China Automobile Circulation Association has released the latest "Automobile Consumption Index" on July 1, 2024. The index for June 2024 stands at 74.5, showing a slight decrease compared to the previous month, indicating an expected decline in car sales in July compared to June.

Market Trends in June

Despite being a traditionally slow month, June's car market showed characteristics of a "not-so-slow off-season". Manufacturers and dealers leveraged the Dragon Boat Festival and the "618" promotions to further intensify their marketing efforts, aiming to hit the semi-annual sales targets and maintain the heat in the passenger car market. However, the continuous decline in prices has led to an increase in consumer caution.

Demand Sub-index

The demand sub-index for June 2024 is 74.4, slightly lower than the previous month. Due to the strong market promotions in May and June, some of the demand that was on hold has been released during these two months. The driving force for automotive demand growth in July is insufficient, with the main growth momentum coming from the demand for car purchases for summer vacation self-driving tours.

Store Entry Sub-index

The store entry sub-index for June 2024 is 70.6, lower than the previous month. With the arrival of the high-temperature and rainy season in July, coupled with being the first month of the third quarter, dealers have indicated that after the sales surge in June, the sales pace in this month will slow down, and the promotional efforts will be reduced, expecting a decrease in the number of consumers entering the store in July.

Purchase Sub-index

The purchase sub-index for June 2024 is 78.2, a decrease from the next month. The car purchase demand accumulated in the first half of the year was released in waves in May and June. The market heat has a certain inertia, and some of the orders in June will be delivered in July, which will help the sales volume in July. However, the market demand in July is slightly falling back, and some demand has been released in advance. Overall, the actual car purchases by consumers in July are expected to be lower compared to June.

Long-term Outlook

In the long term, the "Auto Scrappage and Replacement Subsidy Implementation Details" policy, which was implemented at the end of April, will further stimulate the increase in the car market. However, since the policy deadline is at the end of this year, its short-term impact on boosting car market sales is not yet apparent. According to information released by the Ministry of Commerce, as of June 25, the Ministry of Commerce's information platform has received about 113,000 applications for car scrapping and replacement subsidies, with the application volume showing an accelerating growth trend.

July - A Traditional Sales Off-Season

From the sales side, July is the first month of the third quarter, and dealers' sales pace will slow down, with promotional efforts weakening compared to June. From the consumer side, some of the consumption demand accumulated in the first half of the year has been released in May and June. The market demand and purchase growth momentum in July mainly come from the demand for self-driving tours during the summer vacation. However, the continuous decline in car prices has intensified the wait-and-see sentiment of some consumers, and the high-temperature and rainy weather in July also has a certain impact on consumers' willingness to visit stores to buy cars. Therefore, it is expected that sales volume in July will be lower than in June.

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