(Yicai Global) Jan. 5 -- Around 50 percent of Chinese auto distributors were operating at a loss last month, even though a number of preferential policies were due to end that month which should have spurred customers to buy, according to a recent survey.

Losses ranged from tens of millions of Chinese yuan, equivalent to millions of US dollars, to hundreds of thousands of yuan, according to a report released by the China Automobile Dealers Association this week.

Only 11.2 percent of car dealers expect to achieve their annual sales targets, 49.5 percent will probably make between 80 percent and 90 percent, while 39.8 percent will not reach 80 percent of their goals, the survey said.

Inventories are still high and the Vehicle Inventory Alert Index edged up 2.1 percentage points in December from a year earlier to 58.2 percent, well above the red line of 50 percent, even though it was a 7.1 percentage points drop from November, the CADA said.

“Compared with November, December sales improved, but not by much,” Lang Xuehong, deputy secretary-general of the CADA, said at a monthly analysis meeting on Jan. 3. Those who did the best were fossil fuel-powered cars by joint venture brands. The sales of independent and luxury brands in December did not change much from November.

New energy vehicle subsidies and a 50 percent discount on fossil fuel-powered car purchase taxes will no longer be available from January, so December was the last chance for customers to take advantage of such preferential policies. But the Covid-19 flare-ups led to drops in both staff attendance and customer footfall, triggering lower-than-expected sales.

“Although sales grew somewhat from November, customer footfall and the number of transactions fell sharply,” a sales director with a luxury carmaker in Beijing told Yicai Global, adding that the market failed to rebound much in the new year.

Passenger vehicle sales reached 2.3 million vehicles last month, bringing total sales for the year to nearly 27 million autos, the CADA said.

Car sales in the first quarter may still be under pressure, as some customers made their purchases before the special deals ran out and which includes the week-long Lunar New Year holiday, the CADA said.

But over 60 percent of dealers believe that auto sales this year will achieve growth, nearly 30 percent think sales will be the same as last year and only a few expect sales to fall, it added.

Editors: Tang Shihua, Kim Taylor