Cui Dongshu: National passenger car market inventory at the end of May was 3.29 million units, with inventory turnover of 56 days

According to the Zhitong Finance and Economics APP, on June 20th, Cui Dongshu stated in an article that this year, manufacturers have significantly reduced production in response to the market downturn caused by a combination of factors such as the wait-and-see attitude brought about by expected stimulus policies and the further promotion of promotional wars. Although the trend of new energy vehicles in May was not strong, by the end of May 2024, the national passenger car inventory was 3.29 million units, with manufacturer inventory at 660,000 units and channel inventory at 2.64 million units. The manufacturer inventory ratio was 19.9%, with a total inventory decrease of 100,000 units compared to May 2023, but an increase of 390,000 units compared to May 2022, overall still considered relatively good.

Due to the extremely slow market recovery after the price reduction during the May Day holiday, the total manufacturer inventory of 3.29 million units at the end of May supports future sales for 56 days, which is basically stable compared to 55 days in May of the previous year.

1. Trends in recent narrow passenger car retail sales

In May, national passenger car retail sales were 1.71 million units, a year-on-year decrease of 2% and a month-on-month increase of 12%. Currently, exceeding March's retail sales in May is a good sign of strength.

In May, national passenger car retail sales were 1.71 million units, a year-on-year decrease of 2% and a month-on-month increase of 12%. Cumulative retail sales since the beginning of the year have reached 8.07 million units, a year-on-year increase of 6%.

As the Chinese New Year in 2023 was the earliest in this century, the retail performance at the beginning of 2024 was very strong mainly due to base factors. The growth in May was weaker, but gradually strengthening, with potential for good growth recovery in the future.

2. Trends in recent narrow passenger car wholesale

In May, national passenger car manufacturers wholesaled 2.031 million units, a year-on-year increase of 1% and a month-on-month increase of 4%. Due to the stabilization and recovery of the market and export promotion, manufacturer sales in May exceeded the historical high point of 2 million units in May 2023 by 28,000 units, reaching a new historical high.

Since 2023, the cumulative wholesale volume has reached a historical high of 25.53 million vehicles. From January to April this year, there was a 10% increase. In May, the wholesale volume reached 2.03 million vehicles, with a year-on-year increase of 8%, showing a relatively strong overall trend.

3. Recent Trends in Narrow Passenger Car Production

In May, passenger car production reached 2 million vehicles, a year-on-year increase of 0.4% and a month-on-month increase of 0.1%. The production in May exceeded the historical high of 1.99 million vehicles in the same period of 2023 by 0.4 million vehicles, setting a new record.

From January to April, passenger car production was 7.45 million vehicles, a year-on-year increase of 9%. In May, 2 million vehicles were produced, up by 0.4%. The cumulative production from January to May was 9.44 million vehicles, a year-on-year increase of 7%. Currently, the production capacity of passenger cars is strong, but the growth from January to May is relatively restrained. In May, some major enterprises made strong adjustments to production to stabilize inventory, ensuring the balance of the dealer system's inventory, especially with the trend of the Fed's interest rate hike and the decline in upstream resource prices, the production and sales of new energy vehicles are relatively cautious.

4. National Passenger Car Industry Inventory Tracking

By the end of May 2024, the national passenger car inventory was 3.29 million units, a decrease of 90,000 units from the previous month. Among them, manufacturer inventory was 660,000 units, channel inventory was 2.64 million units, and the manufacturer inventory ratio was 19.9%. The total national passenger car inventory decreased by 100,000 units compared to May 2023, but increased by 270,000 units compared to May 2022, still showing a relatively good overall situation.

5. National Passenger Car Market Forecast Index and Satisfaction Index

We evaluate monthly market performance according to the setting method and evaluation results of the PMI index. Based on the forecast summary calculated by internal personnel of manufacturers, the Passenger Car Forecast Index (PFI) for May is 19%, and the Satisfaction Index (PSI) is 38%. The Passenger Car Forecast Index for June is 34%. The satisfaction evaluation of the market in May is similar to the feeling of the auto market at previous ultra-low points From the current inventory level of 3.29 million units and the expected market growth by May 2024, the industry's inventory digestion pressure is not significant. Given the current stable situation of price promotions, car companies need to timely track policy environment and market changes, cautiously set production and sales pace, increase inventory cautiously based on dealer inventory structure, and promptly clear historical inventory.

6. Overall Characteristics of National Passenger Vehicle Inventory

Overall, the inventory of independent and mainstream joint venture car companies in May 2024 has significantly decreased compared to the end of 2023, reflecting strong risk awareness of car companies and a substantial improvement in inventory security. In May, the inventory of joint venture brands remained relatively stable compared to the previous month, while the inventory of independent car companies remained basically unchanged from April.

In terms of inventory cycle, the inventory accumulation period starting from September 2021 peaked at 3.94 million in November 2022, gradually decreasing to 3.39 million in May 2023. The inventory accumulation from May 2023 to November 2023 brought significant pressure, leading to strong destocking starting from December 2023. However, due to the severe contraction of fuel vehicles, the pressure on inventory has not been significantly alleviated.

7. Growth in National Passenger Vehicle Inventory Days

With the expected market recovery in 2023, strong replacement demand led to a significant decrease in inventory days. The retail performance in March 2024 after the Spring Festival was relatively weak. With the promotion of central consumption policies and the active marketing activities such as local auto shows, the overall consumption in the spring market is expected to be good. Therefore, we predict that the total sales volume of manufacturers in May to July will remain relatively stable. The summer trend is expected to be relatively good, with the estimated existing inventory support for future sales days at 56 days in May 2024, compared to 50 days in May 2022 and 55 days in May 2023, indicating overall significant inventory pressure.

8. Recovery of National New Energy Passenger Vehicle Inventory

Analyzing the inventory changes of companies solely producing new energy vehicles, the inventory at the beginning of 2023 was 200,000 units, which remained good at the beginning of the year and then entered a period of rapid inventory growth. By the end of November 2023, the total new energy inventory of pure new energy vehicle companies was at 400,000 units, decreasing to 390,000 units in December, further dropping to 330,000 units in March 2024, and reaching 410,000 units in May, with a significant increase in new energy inventory in the dealer channel The overall health of industry inventory.

In November 2023, inventory reached a recent peak of 400,000, with the main growth coming from dealer inventory, which is also the result of the mainstream new energy sales distribution model. In May 2024, dealer inventory surged to 410,000, slightly higher, and channel inventory also rebounded