Market Pulse Report June 2024

"Market Pulse" has always been a responsive and participative barometer for the "sales, inventory, and profit" status of automobile dealers. As part of the market's early warning mechanism, the China Automobile Circulation Association keeps a close eye on key indicators and shares research results in a timely and accurate manner with peers, hoping to provide effective reference and benchmarking for dealers and manufacturers.

As of July 9, 2024, the "Market Pulse" was completed on schedule with the active participation of 1304 dealers from 45 mainstream brands. Below is the interpretation of this report by Mr. Song Tao, Assistant to the President of the China Automobile Circulation Association:

June 2024 Overview:

• Passenger car market retail sales reached 1.755 million units, a year-on-year decrease of 8%, and a slight month-on-month increase of 2%.
• Cumulative retail sales for 2024 reached 9.828 million units, a year-on-year increase of 3%.
• Despite the Dragon Boat Festival and the "618" shopping event, the Chinese car market did not usher in a new era of full-scale price competition but continued on its established trajectory.
• Car companies used the time window to attract consumers' attention and promote transactions through online channels and offline activities.
• However, the busy farming season and the hot weather in the north and rainy weather in the south had adverse effects on dealers' customer gathering and transactions.
• Based on past performance in June and July, it is expected that car market sales will fall back.

Market Dynamics:

• The market's prosperity hides underlying currents. The various preferential policies launched by car companies and dealers, along with the acceleration of new car models, pose unprecedented challenges to consumers.
• Consumers are now more rational and analytical, not only focusing on the immediate cost-effectiveness of vehicles but also highly anticipating the long-term real experience of new models.
• Despite promotional strategies like the Dragon Boat Festival, "618" shopping festival, and trade-ins, the market's short-lived prosperity hides the deep operational pressure on dealers.

Regional Analysis:

• The Northeast region had the lowest GP1 at -28.8%, while the Southwest region had the highest inventory coefficient at 1.86.

Luxury Brand Market Analysis:

• Luxury brands showed a slight increase in inventory coefficient, indicating a cautious approach by manufacturers towards dealers during the semi-annual assessment node.
• GP1 slid from -22.0% to -24.2%, reflecting intense competition among luxury car dealers.
• Mercedes-Benz, BMW, and Lexus maintained stability, while Porsche still faced inventory pressure despite adjusting inventory in May.

Joint Venture Brand Market Analysis:

• Joint venture brand inventory coefficient significantly decreased to 1.74, with GP1 continuing to decline to -26.3%.
• Japanese brands are mainly in the green zone, but the gap between brands has narrowed due to the impact of new forces.
• GAC Toyota's models like Sienna and Frontier performed well, with a continuous increase in hybrid model sales, accelerating electrification and enhancing dealers' profitability.

Domestic Brand Market Analysis:

• Domestic brand inventory coefficient decreased to 1.59, with GP1 slightly improving to -10.5%.
• Domestic brands have been stable in the past two years, especially new energy vehicles, which are increasingly recognized by Chinese consumers.
• BYD, Great Wall Weipai/Tank are still in a leading position, while Geely remains on the edge of the yellow zone.
• GAC Motor's dealers faced increased pressure at the semi-annual assessment node, changing from a yellow to a red zone brand.

The China Automobile Circulation Association is committed to maintaining long-term stable returns for investors. The association will continue to communicate with manufacturers to protect the interests of investors and dealers and promote a win-win situation between manufacturers and dealers.

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