Car inventory hits new high amid bleak market outlook

Ominous numbers foretell hard times ahead for world's largest auto market, analysts warn

China's auto dealers are under mounting pressure because of too much inventory, which reached this year's peak last month and is unlikely to turn better in December, compounding the foreboding of hard times ahead in the world's largest car market.

The Vehicle Inventory Alert Index, which should be lower than 50 percent when the market is healthy, soared to a dangerous level of 75.1 percent in November, as opposed to 49.8 percent in the same month last year, according to statistics from the China Automobile Dealers Association released last week.

The index, composed of such factors as stock, market demand and dealerships' financial conditions, is compiled based on a survey of more than 1,000 stores in China that sell 55 brands of vehicles, both Chinese and foreign, according to the association.

A major barometer of the automotive market, the index had been hovering above the 50 percent level for 11 months, an alarming phenomenon unseen in years, said Lang Xuehong, deputy secretary-general of the association.

She warned that it is highly probable that the unhealthy inventory level will continue into December.

"So far, the market has shown no signs for us to feel optimistic about its performance in December. The dealers are haunted by the epidemic of pessimism," Lang said.