China’s Auto Industry Climate Index Dips in Q2

China’s automotive industry climate index eased in the year’s second quarter, ending three straight quarters of growth.

The index was at 105.7 points, down 0.1 from the previous quarter, the China Economic Monitoring Center of the China National Bureau of Statistics, together with Sinotrust International Information & Consulting (Beijing) Co. Ltd., say in a joint statement.

“The industry climate index of Q2 remains high, despite a slight fallback,” the two entities say in their report. “The indicators of production, sales, profit, tax, etc. all continue to rise, although the growth shows a slowdown.

The report also notes as demand starts to fall in the year’s second half, production will lose its momentum to lighten vehicle inventories, “deserving auto makers' close attention.”

The dealer manager index was at 91.7 points in the second quarter, “showing dealers are obviously not confident about their sales performance in the upcoming slack season,” the report says.

However, entrepreneurs and dealer managers have divided opinions about the future operation of China’s auto industry, and this divergence will probably increase, it notes.

The report says the survey of auto makers and dealers shows the industry already was noticing signs of market cooling in the second quarter.

“The rapid growth in auto production and sales will slow down” in the third quarter, the report predicts. “In addition, dealers are very cautious, or even worried, about the market development in Q3,” when seasonal slowdowns are expected.