Yao Jingyuan, chief economist of the National Bureau of Statistics of China, delivered the first ever "China Automotive Industry Climate Index" report at the Summit Forum 2009 of the 13th Shanghai International Automobile Industry Exhibition. It has now been published by the automotive marketing solutions supplier Sinotrust, which jointly developed the Index with the China Economic Climate Monitor Centre of the National Bureau of Statistics of China.

The Index is based on production and sales data, employment, cost, price, economic benefits, etc. on China’s automotive industry and is supported by surveys of auto-related entrepreneurs and executives. It is intended to become the “hourglass” of China's automotive sector, and to support the government's national macroeconomic control of the domestic automotive market and the creation of production and sales plans by OEMs.

The Index result for the first quarter of 2009, a figure whose calculation is not explained, was 98.4 (2001: 100, a year-on-year drop of 3.3 and a month-on-month drop of 0.7). Overall, the auto industry witnessed a quarter-on-quarter decline, but Sinotrust says a turn for the better has since taken place, with new vehicle sales rising.

The ‘Pre-warning Index of China's Automobile Industry’ is described as a key index reflecting the industry’s operating conditions. Since the 2008 second quarter, the pre-warning index has declined each quarter to 83.3 in first quarter 2009, down 26.7 year-on-year and 3.4 from the previous quarter.

The 2009 first-quarter index has fallen from the "green light zone" to the critical line between "green light zone" and the worse "blue light zone”, but with significantly increased sales volumes in March, the likelihood of the index falling further into the "blue light zone" decreased.

The Q1 2009 Entrepreneur Expectation Index compiled from opinion surveys  was 125.0, against a base of 100, indicating OEM optimism concerning market prospects.

The Dealer Manager Index of China's Automobile Industry was 105.8. This index is based on auto retailers' judgment of the current situation of the sector and their expectations of corporate performance. The 2009 first quarter index was 105.8, slightly lower than the Entrepreneur Index, indicating that dealers were not as optimistic as OEMs.

Looking forward, Sinotrust notes that first-quarter 2009 new car sales resumed positive growth, and both production and sales broke through 1,150,000 units, hitting a single-month record high. However, economic benefit indicators such as corporate profit were still decreasing, albeit at a slower rate.

According to the Entrepreneur Expectation Index survey, 47.1% of executives of vehicle manufacturers estimated that the second-quarter sales would "slightly increase," and the proportions of those who believe that sales would "significantly increase" and "slightly decrease" were 17.6% each. Regarding second-quarter sales, 77% of entrepreneurs forecast increased production volumes. Regarding stocks, the proportions of respondents who thought that inventory would increase, remain unchanged, and decrease were 40%, 26.7% and 33.3% respectively.

Predicting second-quarter revenues, the proportions of respondents who believed that their firms’ earnings would "slightly increase" and "remain unchanged" were 53.8% and 38.5% respectively; only 7.7% of them answered "slightly decrease." Concerning capital resources, 78.6% of respondents reported that their enterprises would have adequate working capital, and 85.7% of them said financing was "easy" or "very easy."

The Dealer Manager Index survey showed estimated second-quarter vehicle sales lower than in the first quarter. The forecast by 14.5% of respondents was “very good”; 32.9% “good”; 20% “average”; 24.2% “poor”; and 8.5% “very poor”. Dealers' confidence in second-quarter demand also significantly declined from the first quarter, with only 7.7% of them holding an optimistic attitude, down 12.5 percentage points. In terms of profitability, more than 40% of dealers forecast a profit increase.