(Yicai) Dec. 3 -- Just 8.2 percent of vehicle dealerships in China expect business to be good this month, down from 9.9 percent in November, while marking the second lowest level for this year after standing at 8.1 percent in July, according to a new survey.

The Vehicle Inventory Alert index for Chinese car dealers was 55.6 percent last month, up from 52.6 percent in October and 51.8 percent a year earlier, according to a report on the findings released by the China Automobile Dealers Association on Nov. 30. A figure above 50 percent suggests a decline in the overall prosperity of auto circulation.

The proportion of dealers expecting a poor market rose to 20.3 percent from 17.7 percent this month from the previous one.

"The survey shows that as much as 80 percent of dealers held a pessimistic view of the market last month, believing that overall performance fell short of expectations," the report said

Dealers are facing challenges with a drop in customers, an increase in wait-and-see sentiment leading to less demand, and a narrowing profit margin on new car sales, among others. In addition, some manufacturers have raised sales targets to boost year-end performance, further exacerbating dealers' inventory backlogs and liquidity shortages.

The expiration of China's policy of exempting new energy vehicles from purchase tax next year, followed by a halved tax rate, may lift consumer enthusiasm this month, according to several experts.

However, the report shows that several factors have tempered this effect, including sales backlog triggered by the peak months of September and October and tightened trade-in policies in certain regions. This has led to a weaker-than-expected surge in demand at the end of the year despite the expiration of tax on NEV purchases and the conclusion of annual large-scale equipment upgrades and consumer goods trade-in policies.

Dealers should rationally assess actual market demand based on specific circumstances, according to the CADA. They should also enhance the promotion of the "trade-in and scrappage renewal policies," strengthen services to boost consumer confidence, prioritize cost reduction and efficiency improvement, and guard against operational risks, it added.

Editor: Martin Kadiev