China's auto market entered the traditional 'Golden September' sales season with high hopes, but the latest data shows the peak season has largely failed to materialize. According to the China Automobile Dealers Association (CADA), the dealer inventory warning index for September reached 63.2%, up 8.7 percentage points year-on-year and 0.9 percentage points month-on-month. The index has remained above the 50% boom-bust line all year, indicating that channel inventories are under pressure and business sentiment is deteriorating.
The survey, reported by Chinese outlet D1EV, found that 54.2% of dealers believe the 'Golden September and Silver October' peak season effect is significantly weaker than in previous years, while 33.7% say the effect has basically disappeared. Only 3.6% think performance is better than usual. In other words, nearly 90% of dealers see this year's peak season as lackluster.
Consumer behavior reflects the caution. With weak confidence and rising price sensitivity, many buyers are delaying purchases, waiting for National Day auto shows or year-end promotions. September's demand sub-index fell to 23.5% from 30.6% in August, while the average daily sales sub-index dropped to 28.9% from 32.7%. Meanwhile, the inventory sub-index rose to 51.8% from 48.3%. Demand is falling, inventories are climbing, and the data clearly shows a 'prosperous season that isn't.'
Dealer Profits Squeezed
The pain is most acute at the dealership level. CADA's 2025 dealer survival survey shows that the proportion of profitable dealers narrowed to 23.5% from 39.3% in 2024, while the loss-making share rose to 55.7%. A staggering 81.9% of dealers report price inversion—selling new cars below their purchase cost—with 51.5% seeing inversion margins exceeding 15%. The squeeze is compounded by high sales targets from automakers, bundled slow-moving models, and delayed rebates, pushing more 4S stores to close.
Lang Xuehong, deputy secretary-general of CADA, noted that the channel network is now roughly half traditional fuel vehicles and half new energy vehicles (NEVs). While NEV stores are more efficient per unit, the overall network is shrinking as fuel-vehicle outlets close. She predicts that by the end of the 15th Five-Year Plan (2026–2030), NEVs—including plug-in hybrids (PHEVs)—will account for over 70% of sales, possibly approaching 80%. The shrinking fuel-vehicle base makes it harder to boost the traditional peak-season 'big market.'
Outlook: From Growth to Stock Competition
Regional and brand disparities are evident. In September, the index for the northern and western regions both hit 67.3%, while the southern region was lower at 54.8%. Domestic brands saw their index rise to 66.0%, while luxury and import brands improved to 59.6%. CADA estimates September passenger-vehicle retail sales at around 1.65 million units.
Looking ahead, the fourth quarter may see a temporary rebound thanks to the National Day holiday and auto shows, but demand is expected to be concentrated and short-lived. Only 42.2% of dealers expect fourth-quarter sales to grow from the third quarter, while 24.1% predict continued weakness. For the full year, 50.6% of dealers expect sales to fall by more than 10%, with 37.3% forecasting a drop exceeding 15%.
Lang cautioned that 2026 was expected to be a 'big year' for new car models, but the market has not delivered. As the industry shifts from incremental expansion to stock competition, the real challenge is moving from 'selling volume' to 'pursuing quality.' The 'Golden September' miss is a clear sign that price cuts alone can no longer drive growth.
