In China, they don’t know where to put 3.41 million brand new cars

The China Passenger Car Association reported that inventories of finished products at local automakers and dealers have risen to 3.41 million units of passenger cars. The national car market has fallen by 37% in recent months due to the elimination of a number of government subsidies and tax breaks for car purchases.

Analysts also explain the sharp drop in sales by the fact that from July 1, 2023, China will no longer register new cars that do not meet the national environmental standard 6B, an analogue of the European Euro-7. Due to the collapse in retail demand, even if absolutely all car factories in China were to close now, the current warehouse inventory will allow the car retail business to continue for another two months. And stocks of cars of premium brands such as BMW, Mercedes, Audi, Lexus, Cadillac can be sold by local Chinese dealers for another 70 days.

Warehouses with cars of purely Chinese brands such as Chery or Haval have to be empty for 54 days, and JV products (with Volkswagen etc.) can be traded for another 64 days. More than 75% of “hanging” cars are equipped with internal combustion engines. The rest are PHEVs and electric vehicles. Since they account for more than 35% of total sales in the Chinese market, the stock of this type of vehicle corresponds to approximately 40-50 trading days. The Association’s press release notes that Chinese automakers are monitoring the current situation and are trying to “respond flexibly” by reducing production volumes.

Earlier, the AvtoVzglyad portal reported about a hard price war unfolding in the Chinese car market. In the course of the process, car brands engaged in real dumping, offering consumers their products at prices that were often halved. The decision suggests that at least part of the accumulated 3.41 million “unnecessary” vehicles will be “dumped” into the scarce Russian market. However, the mechanism for its implementation is not entirely clear.

The China Passenger Car Association reported that inventories of finished products at local automakers and dealers have risen to 3.41 million units of passenger cars. The national car market has fallen by 37% in recent months due to the elimination of a number of government subsidies and tax breaks for car purchases.

Analysts also explain the sharp drop in sales by the fact that from July 1, 2023, China will no longer register new cars that do not meet the national environmental standard 6B, an analogue of the European Euro-7. Due to the collapse in retail demand, even if absolutely all car factories in China were to close now, the current warehouse inventory will allow the car retail business to continue for another two months. And stocks of cars of premium brands such as BMW, Mercedes, Audi, Lexus, Cadillac can be sold by local Chinese dealers for another 70 days.

Warehouses with cars of purely Chinese brands such as Chery or Haval have to be empty for 54 days, and JV products (with Volkswagen etc.) can be traded for another 64 days. More than 75% of “hanging” cars are equipped with internal combustion engines. The rest are PHEVs and electric vehicles. Since they account for more than 35% of total sales in the Chinese market, the stock of this type of vehicle corresponds to approximately 40-50 trading days. The Association’s press release notes that Chinese automakers are monitoring the current situation and are trying to “respond flexibly” by reducing production volumes.

Earlier, the AvtoVzglyad portal reported about a hard price war unfolding in the Chinese car market. In the course of the process, car brands engaged in real dumping, offering consumers their products at prices that were often halved. The decision suggests that at least part of the accumulated 3.41 million “unnecessary” vehicles will be “dumped” into the scarce Russian market. However, the mechanism for its implementation is not entirely clear.