Gasgoo.com (Shanghai July 23) - In an effort to better monitor the automobile market, the China Automobile Dealers Association started a monthly warning report system for low supply inventories in March. According to autoobserver.net, the CADA has sounded a warning for the first time since its inception that inventories are excessively high.

The inventory index is a monthly rating compiling statistics regarding the amount of vehicles stored by dealers compared to sales, with recommended inventory storage numbers being 1.5 times higher than sales. Anything exceeded that should trigger off a warning alert. The system measures dealers business risk as well as fluctuations in the market.

The most recent index measures data from over 20 manufacturers, including Shanghai VW, Shanghai GM, FAW-VW, FAW Car and FAW Toyota. Despite the generally positive trends in the economy, car sales have been declining as early as the end of 2010. The recent purchase restriction policies have also had their effect on vehicle inventories.