(Yicai Global) Dec. 4 -- China's Vehicle Inventory Alert Index, an inventory alert compiled by the China Automobile Dealers Association and designed to show trends in car sales, hit 49.8 percent in November, down 0.1 percent from a month earlier. The change is due to sales promotions by dealers and the upcoming change in the vehicle sales tax next year, said China Automobile Dealers Association.

The automobile distributors usually step up their promotion efforts for potential clients who plan to buy a car before the Chinese New Year. The sales tax for small-displacement passenger vehicles will also be levied at the statutory rate of 10 percent, up from 7.5 percent, starting from Jan. 1, 2018. All these factors fuel demand for cars, the Association said.

Vehicle replacement effort also rises in the end of the year in order to avoid the increased depreciation rate in the following year. In addition, the Guangzhou Auto Show also impacts the regional demand in the southern market in the Pearl River Delta region. Some carmakers delegate higher sales volume for distributors to reach certain sales targets. To increase the sales volume, distributors reduce the price at the expense of profits.

The market demand is expected to rise in December compared with last month. Since December witnesses final moments of sales efforts, most distributors expect the market demand to be higher than that of last month. However, as the real estate prices in some cities have risen, this would draw some cash flow, the distributors point out. Many new car models make their debut in the end of the year, which would stimulate the market. However, since consumers need time to find out more about new models and some consumers choose to hold on, the uncertainty naturally increases in the year-end, suggest relevant research findings.