(Yicai) Dec. 5 -- The inventories of Chinese car dealerships are still at a high level because of the weak market demand, even though carmakers have been launching year-end promotions.

The Vehicle Inventory Alert Index for Chinese car dealers rose 1.8 point to 60.4 in November from October, exceeding the mark of 60 for the first time in the past six months, according to recent statistics by the China Automobile Dealers Association. A reading below 50 indicates inventories are in a reasonable range. The higher the figure, the lower the market demand and the greater the inventory pressure.

Over 79 percent of the 2,000 Chinese car dealers polled by the CADA claimed that November’s sales missed expectations, with nearly 24 percent believing last month’s figures brought in some optimism. Only 1.7 percent of the surveyed dealerships said November’s sales volume exceeded expectations.

Car prices significantly fell last month because many car manufacturers and dealers slashed prices to digest inventories, said Lang Xuehong, deputy secretary-general of the CADA. Some customers even enhanced their wait-and-see attitude and chose not to purchase cars for the moment to see if the prices could drop further, she added, noting that this also led to more intense competition.

The general demand for cars will increase this month because automakers will introduce even greater promotions, leading clients with a wait-and-see attitude to purchase, Lang pointed out. Other two reasons that sales will increase in December are that the period before the Chinese New Year is a traditional peak season and that some local governments’ subsidies expire by year-end, she added.

Various carmakers do not pursue customers’ satisfaction, quality, or efficiency, instead, they believe production capacity and sales volume are the gauges to measure failure and success, so their output and sales volume are already far beyond the market’s actual demand, CADA’s President Shen Jinjun said.

Car dealers can do nothing but offer lower prices to achieve higher sales volumes because of high inventories, Shen noted. The price war was simply caused by the excessive unleashing of automotive production capacity and relatively insufficient market demand, he added.

More than one-third of the car dealers polled by the CADA are optimistic about next year’s performance, claiming that the passenger vehicle market will grow around 5 percent.

Editor: Futura Costaglione