(Yicai) Dec. 3 -- Fewer than one in 10 auto dealerships in China expect business conditions to be favorable this month, according to the findings of a survey carried out by the China Automobile Dealers Association.

Just 8.2 percent of car dealers expect positive business in December, down from 9.9 percent in November, the report published on Nov. 30 showed. That is the lowest level this year after July’s 8.1 percent. Those expecting a weak market climbed to 20.3 from 17.7 the month before.

Eighty percent of traders were pessimistic in November, reporting that overall performance fell short of expectations.

The CADA’s Vehicle Inventory Alert Index, a monthly gauge of inventory pressure on auto dealers, stood at 55.6 last month, up from 52.6 in October and 51.8 a year earlier. A reading above 50 indicates weakening overall conditions in the auto distribution sector.

Dealers are struggling with declining customer traffic, growing hesitancy among buyers, shrinking demand, and tightening margins on new car sales, while some automakers have raised year-end sales targets, worsening inventory build-up and straining dealers’ liquidity.

The full tax break on buying new energy vehicles will be replaced next year, with buyers having to then pay half of the standard 10 percent vehicle purchase tax. That may encourage an uptick in buying this month, according to several experts. 

But the report notes that strong sales in the September to October period pulled demand forward and tightened trade-in incentives in some regions, leading to weaker-than-expected demand at the year’s close despite the looming end of the NEV tax break.

The CADA recommends that dealers realistically assess actual demand according to their specific circumstances, promote trade-in and scrappage renewal policies more actively, strengthen customer services to boost buyer confidence, focus on cost-cutting and efficiencies, and take steps to manage business risks.

Editor: Martin Kadiev