Analysis of the Impact of Passenger Car Inventory Rebound to 3.79 Million Units on Automotive Industry Investments

According to the latest data, the national passenger car industry inventory reached 3.79 million units at the end of November 2025, an increase of 380,000 units from the previous month and 590,000 units from November 2024. This data indicates that during the traditional peak season, the automotive industry has experienced an abnormal rebound in inventory, forming the characteristic of “peak season stockpiling”. [1]

The inventory level of 3.79 million units is far beyond the industry’s healthy range. Usually, an inventory turnover period of 45-60 days is considered healthy, while the current inventory may have exceeded 90 days. This will lead to:

• Increased capital occupancy cost
  : Based on an average of 150,000 yuan per vehicle, the 3.79 million units of inventory occupy approximately 568.5 billion yuan
• Increased warehousing costs
  : Including parking space, maintenance, insurance, etc.
• Increased discount pressure
  : To clear inventory, manufacturers may be forced to cut prices for promotions, compressing profit margins

The forecast team of the Passenger Car Association has an optimism rate of only 24% for the December market, which reflects:

• Insufficient confidence of manufacturers
  : Manufacturers are cautious about future market demand and reduce expansion investments
• Dealers under pressure
  : High inventory leads to tight capital chains for dealers, which may reduce new car purchases
• Consumer wait-and-see sentiment
  : Expecting possible price cuts and promotions in the future, delaying car purchase decisions

In a high-inventory environment, the risk resistance capabilities of different enterprises are significantly different:

• Tesla (TSLA) currently has a market capitalization of 1.5 trillion USD and a P/E ratio of 286.23x, indicating that the market is optimistic about its long-term growth [0]
• General Motors (GM) has a year-to-date increase of 56.73% and has received buy ratings from most analysts [0]
• Toyota ™ has a P/E ratio of only 10.24x, with relatively reasonable valuation [0]

• Enterprises with weak financial strength may face cash flow crises
• Market share will further concentrate on leading enterprises
• Industry mergers and reorganizations may accelerate

From the perspective of sector performance, the consumer cyclical sector has performed weakly recently:

• The consumer cyclical sector fell by 2.21%, ranking second to last among all sectors [0]
• The automobile manufacturer sector is directly affected by high inventory
• Investors prefer defensive sectors, with the consumer defensive sector rising by 0.36% [0]

High inventory may prompt the government to consider introducing stimulus measures:

• Car purchase subsidy policy
  : May reintroduce or increase car purchase subsidy intensity
• Trade-in policy
  : Encourage the elimination and renewal of old vehicles
• New energy vehicle promotion
  : Increase preferential treatment for new energy vehicle purchase tax

1. Avoid enterprises with high inventory risk
   : Focus on inventory turnover days and dealer discount rates
2. Focus on cash-rich enterprises
   : Choose enterprises with low asset-liability ratios and stable cash flows
3. Wait for favorable policies
   : Pay attention to the timing of the introduction of automobile consumption stimulus policies

1. Technology-leading enterprises
   : Enterprises leading in new energy and intelligent driving technologies have long-term growth potential
2. Enterprises with global layout
   : A high proportion of overseas markets can diversify domestic market risks
3. Industrial chain leaders
   : Key links in the industrial chain such as auto parts and batteries

1. Risk of prolonged inventory digestion cycle
   : If consumer demand continues to be weak, the inventory digestion cycle may be further prolonged
2. Risk of intensified price wars
   : To clear inventory, enterprises may launch more intense price competitions
3. Policy uncertainty
   : The intensity and timing of stimulus policies are uncertain
4. Macroeconomic downturn risk
   : Slow economic growth may further suppress automobile consumption demand

The rebound of passenger car inventory to 3.79 million units reflects profound changes in the supply-demand relationship of the automotive industry, which has formed obvious pressure on industry investments in the short term. However, this round of adjustment will also accelerate industry consolidation, laying the foundation for long-term healthy development. Investors should control risks while focusing on leading enterprises with core competitiveness and technological advantages, and seize structural opportunities brought by industry transformation and upgrading.

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[0] Gilin API Data - Stock prices, financial indicators, analyst ratings, market index data
[1] Automotive News - “China dealership inventories spike as new-car demand slows on depleted subsidies” (https://www.autonews.com/china/an-china-dealership-inventories-surge-in-november-2025-1211/)
[2] Automotive News - “VW’s $186 billion 5-year investment plan reflects belt-tightening amid U.S. tariffs, China” (https://www.autonews.com/volkswagen/ane-vw-cuts-investment-on-tariffs-china-slump-1206/)