China's Auto Dealer Inventory Alert Index Drops to 54.6% in March - CADA

China's Auto Dealer Inventory Alert Index Drops to 54.6% in March - CADA

China's Auto Dealer Inventory Alert Index (VIA) has shown a significant improvement, dropping to 54.6% in March 2025, according to the China Automobile Dealers Association (CADA). This marks a 3.7 percentage point decrease from the same period last year and a 2.3 percentage point decline from the previous month. The VIA remains above the 50% threshold, indicating that the automotive industry is still in a state of contraction but has shown signs of recovery.

The VIA is a critical indicator of the health of the automotive distribution sector, reflecting the balance between supply and demand. A lower index suggests that dealers have less inventory, which can lead to improved cash flow and profitability. The recent decrease in the VIA can be attributed to several factors, including the introduction of new car models, market stimulus measures, and the overall economic recovery.

The CADA attributed the improvement to supportive national policies, local subsidy programs, and increased consumer demand. The market's momentum was bolstered by major events such as the "Double 11" online shopping promotions and the successful Auto Guangzhou 2024. Additionally, automakers and dealers have intensified their efforts to meet annual sales targets, which has led to a surge in sales.

Despite the positive trends, the market still faces challenges. Many dealers reported that market performance did not meet their expectations, and liquidity remains a concern. The CADA noted that while the index has improved, the industry is still grappling with structural adjustments and support measures to ensure long-term sustainability.

Looking ahead, the market is expected to continue its recovery, driven by increased client flow and a resurgence in consumer interest in purchasing vehicles. The focus is likely to shift towards new energy vehicles (NEVs) and intelligent connected vehicles (ICVs), which are becoming increasingly popular among consumers due to their environmental benefits and advanced features.

In conclusion, the March 2025 VIA data indicates a positive trend in the Chinese automotive market, with signs of recovery and improved market conditions. However, the industry must continue to adapt to changing consumer preferences and economic conditions to ensure sustained growth.