MNI BRIEF: Increased China Car Inventory Indicates Weak Demand

The China Automobile Distribution Association announced on Tuesday its Vehicle Inventory Alert Index had risen to 58.6% in October, up 0.8 pp m/m but down 0.4 pp y/y.

The survey accounts for the inventory-to-sales ratio amongst China’s largest dealers and considers below 50% within a reasonable range while an increased level shows lower market demand and a build up of inventory pressure. October’s read is the highest level since April this year.

Despite China’s economy growing 4.9% y/y in Q3, beating market expectations of 4.5%, officials have stressed domestic demand remains insufficient. China's manufacturing PMI fell by 0.7 points to 49.5 in October, indicating that the foundation for continued recovery requires further consolidation, data from the National Bureau of Statistics showed Tuesday.

Last week the government announced CYN1 trillion in issuance of treasury bonds aimed at boosting demand and keeping China’s economy growing at over 5% next year, policy advisors and economists recently told MNI. (See MNI: China Stimulus To Keep 2024 Growth Over 5%, Advisors Say - Bonds & Currency News | Market News)