China's car industry index hits new high

The China Automotive Industry Climate Index set a new high of 105.8 points in the first quarter of this year, up 3.8 points from the fourth quarter of 2009.

The index has been on the rise since it hit a record low in the first quarter of 2005.

The Pre-warning Index of China Automotive Industry, an important indicator reflecting the climate of the sector, moved into the "Yellow Zone" to 133.3 points, up 16.6 points from the last quarter of 2009 and has risen for the fourth quarter in a row.

Industry insiders said the figures, jointly released on Thursday by the National Bureau of Statistics (NBS) and Sinotrust International Information & Consulting (Beijing), the largest automotive marketing solutions provider in China, is a sign that the automotive industry is starting to overheat, the Beijing Times reported.

However, Pan Jiancheng, deputy director of the China Economic Monitoring Center of the NBS, said that despite a reading in the "Yellow Zone" the figures showed the country's automotive industry is rebounding, not overheating, due to low base numbers in the same period of last year as a result of the world financial crisis.

The Dealer Manager Index, which shows the car dealers' perception of the current market situation as well as their anticipations about the future, dropped below 100 points for the first time in history (97.9 points), 19.5 points lower than that of the previous quarter, showing that they are not optimistic about future market trends.

That was partly explained by indicators of production, sales, profits and tax, which all posted increases to different extents in the first quarter. Meanwhile, the capital occupation rates for finished products and accounts receivable rose quickly but their proportions in sales revenue were decreasing, indicating that the inventory and account sales were in a normal condition.

Pan said the cooling down of the auto market in March and April would be good for the health of the industry, adding that the auto market would keep growing becuase of China's relatively fast economic growth, coupled with the continuing rise of people's incomes and the growing contribution of consumption to economic growth as the country moves to restructure its unbalanced economy.

The Entrepreneur Expectation Index, which reflects carmakers' perception of the current market situation and their anticipations about the future, fell 10.7 points from the previous quarter to 115.6 points. A measure above 100 points indicates that entrepreneurs are basically satisfied with the current market status and are still optimistic about the overall market operation in the future.