China auto sales boost masks stress

China’s car market grew at its fastest pace in six months in June, driven by a tax break, though dealer-inventory data paints a gloomy picture. Accord to The Wall Street Journal, Foreign and domestic auto makers shipped 1.78 million cars—sedans, sport-utility-vehicles and minivans—to dealers last month, 18% more than a year earlier. But behind the headline sales figures are dealer inventories that tell a different story. An index measuring inventory levels rose to 60% from 51% in May, according to the China Automobile Dealers Association, a government-backed trade group comprising 20,000 dealers. A reading above 50% indicates inventories at high levels. Higher inventories pushed dealers to offer bigger discounts—10.3% on average in June, compared with 10% in May.