Auto Dealer Inventory Warning Index Rises to 61.1% in July 2026

According to the latest monitoring data from the China Automobile Dealers Association (CADA), the Automotive Dealer Inventory Warning Index stood at 61.1% in July 2026, up by 3.9 percentage points both year-over-year and month-over-month, remaining above the boom-bust threshold. The association estimates that retail sales of passenger vehicles in July totaled approximately 1.55 million units. Affected by the traditional off-season, the auto market showed weak performance in July. Following a short-term rebound in June driven by end-of-month sales pushes and concentrated deliveries of new models, demand was subsequently exhausted. This, combined with extreme weather conditions suppressing foot traffic and vehicle deliveries at dealerships, led to subdued consumer demand. Looking at the first half of the year, most dealers fell short of their sales targets, with overall target completion rates remaining low. On pricing, intense competition persisted at the retail level in July, with no signs of price recovery. Most dealers maintained or even increased discount levels, putting further pressure on profit margins. Sub-index data showed declines month-over-month in inventory levels, market demand, and average daily sales, while indices for staff employment and business conditions saw slight improvements. Consumers remained hesitant, resulting in insufficient momentum in terminal market demand. Regionally, the national index stood at 61.1% in July, with the North, East, and West regions all exceeding 60%, while the South region recorded 53.9%. By brand segment, luxury/imported brands and mainstream joint-venture brands saw their inventory warning indices rise month-over-month, whereas domestic brands experienced a slight decline. Transaction rates, transaction prices, and inventory volumes all trended downward in July. CADA forecasts that the dealer inventory coefficient will increase further in August. Nearly half of dealers expect market demand to decline in August, with the majority assessing their business conditions as merely average. Dealers currently face mounting pressures related to cash flow, inventory, customer traffic, and profitability, accelerating industry consolidation. Although the graduation and back-to-school seasons may stimulate some demand, August sales are expected to improve only slightly compared to July but will remain within the off-season range. Looking ahead to the second half of the year, more than 60% of dealers anticipate a year-over-year decline in sales volume and generally hold a cautious outlook toward the traditional "Golden September" peak season, maintaining an overall stance of prudent observation regarding market trends.