Auto dealers collectively declined. As of press release, Zhongsheng Holdings (00881) fell 9.07% to HK$13.84; MeiDong Auto (01268) fell 8.19% to HK$2.69; and Yongda Motor (03669) fell 5.12% to HK$2.04.
The Zhitong Finance App learned that car dealers were collectively declining. As of press release, Zhongsheng Holdings (00881) fell 9.07% to HK$13.84; MeiDong Auto (01268) fell 8.19% to HK$2.69; and Yongda Auto (03669) fell 5.12% to HK$2.04.
According to the news, the China Automobile Dealers Association released the results of the “Auto Dealer Inventory” survey for April 2024. The comprehensive inventory coefficient for car dealers in April was 1.70, up 9.0% month-on-month and 12.6% year-on-year. Inventory levels were above the warning line, and dealer inventory pressure increased. Furthermore, consumer demand for car purchases in May did not meet expectations. The May Day holiday this year was not clearly driven by the growth of the used car market. The off-season for used car market transactions has been brought forward from June in previous years to mid-late May. It is recommended that dealers should prioritize inventory and recover funds to ensure a smooth transition during the June and July off-season.
Zhongtai Securities pointed out that the core value of car dealers is for automakers to bear inventory risk. In a market environment where supply exceeds demand, it is a probable event for automakers to switch from direct management to a distribution model, but it is difficult for us to determine when the industry will recover. The bank pointed out that Meidong is the company with the fastest inventory turnover in the industry, and extreme operating efficiency can help the company maintain a healthier cash flow and balance sheet. Auto dealers are a highly cyclical industry. In the downturn cycle, dealers face great operational risks, but companies that survive the crisis are expected to show strong performance flexibility in the upward cycle of the industry.