Automotive Industry PMI

1. Definition and Scope of the Indicator

The Automotive Industry PMI (Purchasing Managers' Index) is a comprehensive benchmark reflecting the operational health and business sentiment of the automotive manufacturing sector. Compiled from monthly surveys of automotive purchasing managers, it tracks key metrics including output, new orders, inventory levels, and supplier deliveries. The index sets 50% as the baseline threshold—readings above 50% indicate expansion, while figures below 50% signal contraction. When analysing China's automotive market performance, sector-specific data within the manufacturing PMI are typically referenced alongside the Dealer Inventory Alert Index (which adopts a similar methodology) to provide a comprehensive gauge of market conditions.

2. Manufacturing PMI and Its Link to the Automotive Sector

The manufacturing PMI published by the National Bureau of Statistics features breakdown data across major industries. Monthly figures for 2026 show that overall manufacturing sentiment fluctuated around the 50-point mark, with the automotive sector displaying distinct seasonal trends: In January, both the production and new orders indices for sectors including automotive fell below the baseline, as market demand cooled and factory output softened; in February, weighed down by the extended Chinese New Year holidays, the automotive sector remained in contraction amid subdued market activity; in April, the headline manufacturing PMI stood at 50.3%, maintaining its expansionary run, while automotive sector sentiment showed marked month-on-month improvement alongside a sharp rebound in export orders; by July, both automotive production and new orders dipped back below the critical mark amid lacklustre supply and demand, dragging the month's manufacturing PMI down to 49.2%. Separately, figures from September 2025 indicated that automotive output and new orders both exceeded 54%, reflecting rapid supply-demand momentum and solid industry confidence.

3. Dealer Inventory Alert Index

Alongside the manufacturing PMI, the Dealer Inventory Alert Index issued by the China Automobile Dealers Association (CADA) serves as a vital supplementary gauge for the automotive retail and distribution sector. Adopting a PMI-style methodology, the index assesses market dynamics across several key parameters, including demand, 4S dealership showroom footfall, transaction volumes, and overall operating conditions, with 50% serving as the critical threshold. In July 2026, the Dealer Inventory Alert Index hit 61.1%, up 3.9 percentage points both year-on-year and month-on-month, snapping a two-month downward trend. Persistently elevated inventory alert levels highlight mounting stock pressure across dealer networks, where retailers face acute cash flow and operational strains; over 60% of dealers anticipate second-half sales to slide further year-on-year. Earlier in April, the comprehensive dealer inventory coefficient had climbed to 1.89, up 7.4% month-on-month and surging 34.0% year-on-year.

4. Sector Divergence and Industry Trends

The automotive PMI and related indicators reveal deep structural trends across the current industry: On one hand, overall vehicle production and sales volumes remained at elevated levels—2025 closed with 34.531 million units produced and 34.40 million units sold, representing year-on-year gains of 10.4% and 9.4% respectively; on the other hand, industry profit margins remained under severe pressure, standing at just 4.4% from January to November 2025—the second-lowest level on record—highlighting a pronounced trend of "rising volume, squeezed margins". While PMIs for equipment manufacturing and high-tech manufacturing consistently outpaced the broader manufacturing sector, signalling the automotive industry's transition up the value chain toward high-end manufacturing, persistent structural headwinds—such as dealership stock backlogs, price wars, and top-line growth without bottom-line gains—remain key challenges for the industry.