Automotive Industry Climate Index

1. Definition and Functional Positioning

The Automotive Industry Climate Index is a quantitative indicator framework that comprehensively reflects the economic performance and future growth trends of the automotive sector. By dynamically tracking and synthesising multi-dimensional economic metrics such as production, sales, profitability, and tax revenue, it outlines cyclical industry fluctuations through the coordinated movement of leading, coincident, and lagging indices. Its core objective is to deliver quantitative insights that assist government agencies, industry players, and investors in forecasting market trends and formulating strategic business decisions.

Presently, China's automotive industry climate index ecosystem features diverse compilers and varying coverage scopes. This encompasses the industry-wide Auto Climate Index (ACI) compiled by the China Association of Automobile Manufacturers (CAAM), dedicated aftermarket indices established by the automotive maintenance and repair sector, alongside specialised indices formulated by academic institutions focusing on taxation and regional automotive clusters.

2. Auto Climate Index (ACI) of China

The Auto Climate Index of China was developed by the China Association of Automobile Manufacturers under the guidance of the Ministry of Industry and Information Technology and the National Bureau of Statistics. Applying established international climate index methodologies, it comprises three core components:

• Coincident Composite Index: Measures current operational performance across the automotive industry

• Leading Composite Index: Projects forthcoming industry trends and trajectory

• Lagging Composite Index: Validates historical economic cyclical patterns

By monitoring dynamic shifts across these three metrics, analysts can determine the automotive sector's prevailing economic cycle and forecast near-term developments. The climate warning signal system classifies market conditions into five distinct bands: Overheating (Red), Warming (Yellow), Stable (Green), Cooling (Light Blue), and Sluggish (Dark Blue).

3. Multi-dimensional Climate Index Framework

The Automotive Maintenance and Repair Industry Climate Index, spearheaded by the China Automotive Maintenance and Repair Industry Association, is published on a quarterly or monthly basis to monitor market movements across the nationwide service and repair sector. The index assesses 12 metrics across five key pillars—business operations, workshop efficiency, financial returns, headcount, and market outlook—forming a comprehensive "1+5+N" framework. Data is collected via probability-proportional-to-size (PPS) sampling across three tiers of workshops nationwide. In 2024, for instance, Chinese New Year disruptions saw the index dip to 16.5% in February before rebounding sharply to 83.3% in March, highlighting pronounced seasonal demand patterns.

The Tax Climate Index offers another vital analytical angle. Developed using tax filings and financial data from listed automotive manufacturers between 2014 and 2023, the index indicates that China's vehicle manufacturing tax sentiment has languished in a prolonged downturn. Subdued sector growth and heightened market volatility underscore an urgent need for better alignment in automotive taxation policies.

In terms of regional automotive industry performance, studies evaluating key Chinese manufacturing hubs reveal that local automotive sentiment trended upward between 2016 and 2023, before diverging over the 2024–2025 period. Factors including higher wage levels and strong new energy vehicle (NEV) production values bolstered local sentiment, whereas heavy exposure to export markets and compressed net profit margins weighed on performance.

4. Future Outlook

The climate index framework is broadening beyond high-level macro tracking into specific automotive sub-sectors, with targeted indices emerging for workshop services, new energy vehicles, and regional automotive hubs. Compilation methodologies and data collection processes are continuously advancing, supported by digital portals and big data analytics to enhance both reporting speed and precision. As a result, the policy utility of these indices is gaining traction, opening up wider applications across early-warning mechanisms, tax policy alignment, and regional industrial planning.