In the first 10 months of this year, passenger cars achieved sales of 15.8644 million units with a year-on-year increase of 9.76%. Under the seemingly optimistic market, there is an undercurrent. The pressure on the inventory of the industry has increased sharply. The price war has made dealers miserable. The number of dealers who have lost, closed down, resold, and delisted is much higher than in previous years. The newly disclosed third-quarter financial report of listed auto dealers shows that some large auto dealer groups are losing money, and it is increasingly difficult for dealers to get a slice of the market.
Faced with Survival Challenges The newly disclosed third-quarter financial report of listed auto dealers shows that the three auto dealers listed in China – Huge Group, Shenhua Holdings and Yaxia Auto – all experienced sharp declines in the first three quarters of this year. In particular, Shenhua Holdings, which had a loss in the same period last year, expanded its losses in the first three quarters from 157 million yuan to 167 million yuan.
Yaxia Automobile suffered a loss of more than RMB 15 million in the third quarter of this year, and its revenue decreased by 257%. As a result, it only achieved a net profit of more than RMB 5.8 million in the first three quarters, a decrease of nearly 90% year-on-year. Yaxia Automobile expects to lose 20 million yuan to 40 million yuan in 2014. In the first three quarters of this year, the huge group achieved a net profit of more than 90 million yuan, a drop of nearly 70% year-on-year. There are also reports that in order to reduce losses and reduce losses, the company has revoked 103 operating outlets in the first half of the year, which is equivalent to reducing the number of outlets by about 8%.
Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said that according to a recent survey by the association, the profitability of the entire auto dealer industry this year is still lower than last year.
“Losing a car at a loss” is not new in China’s auto market today. According to data from the China Automobile Dealers Association, new car sales accounted for 86.7% of the top 100 dealers in 2013, with an absolute advantage in operating revenue; Profits accounted for 50%, which is greater than the profit of new car sales.
The reporter visited the auto market and learned that in the past, the middle and high-class cars with big profits have now fallen below 160,000 yuan, which are basically sold at a loss. Some small cars are also zero-margin. Most independent brand dealers have huge financial pressures and have high operational risks. Zhang Xiao, a sales manager of a self-owned brand dealer, told reporters that “it’s too hard to sell only a dozen cars a month.”
With the increasingly fierce competition among dealers, the situation of losing money and selling cars has gradually spread from low-end and mid-end brands to high-end brands. A Beijing-based Audi brand dealer told reporters that “new car sales will not only make money, but even the manufacturers’ rebates will go out.”
In the face of the loss of new car sales, dealers often rely on the profit of after-sales service to make up for profit, but now this method is not easy to achieve. Mr. Li, a BMW dealer, told reporters that his BMW 4S store is currently suffering a serious loss, especially the imported 7-series models, which cost more than 200,000 yuan. "This year, there have been too many losses in sales, and the income from after-sales service has not been able to survive. The overall operation is in a state of serious losses."
The reporter learned from the head of a luxury car brand dealer group that the entire group is responsible for all 4S stores operated by the brand, the new car sales and after-sales service business has lost more than 10 million yuan for two consecutive months, “regardless of the luxury Compared with other dealers of the car brand, compared with other brand operation teams within the group, we are still in a good condition."
Where are the opportunities for transformation? Before 2010, China's automobile production and sales grew rapidly. After entering 2011, China's auto sales increased by less than 3% year-on-year. In the past three years, the growth rate has been maintained at a stage of slight increase. At the same time, with the channel construction and network sinking of auto manufacturers, dealers have sprung up all over the country.
According to data from the China Automobile Dealers Association, the number of 4S stores in China at the end of 2010 was about 16,000, and by 2013 it had exceeded 22,000. What followed was a reduction in single-store sales and profitability. Research shows that in 2012, 40% of dealers were at a loss, and by the end of 2013, this proportion had increased to 47%. Some insiders pointed out that at present, more than 60% of dealers nationwide are in a period of loss or break-even.
“The 'cake' is just one more side, and the number of people who eat the 'cake' is doubled.” The industry has described this phenomenon in the automotive market.
“The auto market resumed growth last year. This year, the main engine factory has greatly increased its expectations. The actual market demand has slowed down, the dealer inventory has increased, the capital pressure has increased, and the benefits have been seriously degraded.” The person in charge of the above-mentioned dealer group introduced the reporter to this year. The root cause of the decline in the profitability of auto dealers is the expected increase in the market for automakers.
"At present, our store inventory is 250~300. According to the average price of 500,000 yuan per car, 300 stock cars occupy 150 million yuan of liquidity, which is unacceptable to dealers. This forces us to lose money. Car." BMW dealer Mr. Li revealed.
In order to alleviate the pressure of survival, most dealers usually choose to cut prices to trade at a price. However, in the fierce competition, the gross profit of bicycles generally declined, and the cost of labor and store rents increased rapidly, and the profit decreased.
In the face of severe pressure for survival, the industry has developed a “prescription”: dealers must accelerate transformation and innovation, accelerate the transformation from traditional resource-selling enterprises to sales-oriented enterprises; actively innovate business models, extend service chains, and implement new car sales. Second-hand car replacement, post-market services and many other industries.
Dealers' after-sales maintenance revenues have been relatively stable all the time, but dealers are worried that “competition has expanded to after-sales, and the after-sales market is likely to become meager because of competition.” At the same time, dealers’ after-sales business is gradually becoming socialized. Repair the impact of the chain. In addition, the loss of business such as insurance is also reducing the profit of dealers.
In the process of continuous service and implementation of multiple industries, the opportunity of dealers is where it deserves to be considered and explored by the industry.
Car companies should lend a helping hand. Even if the dealers’ losses are serious, the profits of car companies are still considerable.” BMW dealer Mr. Li believes that car companies suppress dealers with strong voice and unequal “treaties” between manufacturers. “Especially multinational companies are everywhere in the exploitation of dealers.”
According to him, car companies use various standards to define 4S shop floor space, building area, building materials use, equipment procurement, furniture procurement, etc., and even specify suppliers, resulting in higher operating costs; car companies will also interfere in distribution The normal operation of the business, linking all assessments to rebates. "These standards have become the overlord clause for dealers, and some have evolved into 'malicious standards' in the actual implementation process."
The person in charge of the above-mentioned dealer group said that the car companies have violated regulations, illegal laws and abused market dominance in many aspects. For example, it is mandatory to determine the dealer's annual sales target. If you do not buy a non-selling model, you will not be eligible for a best-selling model, and you will be forced to purchase a designated third-party product and service. "This is a hidden rule."
The tough profit situation has also led to subtle changes in the relationship between dealers and automakers. In September, 110 dealers of a Korean brand refused to purchase the goods; recently, 25 Japanese 4S stores of a Japanese brand refused to pick up the car; the huge group also announced the withdrawal of the Aston Martin sales business in recent days; some dealers will pass the Che Youhui And industry organizations report the monopoly and irregularities of auto manufacturers.
Experts in the industry suggest that when dealers encounter difficulties in the market, they must dare to communicate face-to-face with manufacturers and negotiate reasonable sales targets. Everyone dares to form a joint force and will be valued by manufacturers. This is also forcing manufacturers to come. Treat the market rationally and treat production rationally.
In the market crisis, dealers are in the most difficult time, how should car manufacturers act? Industry insiders suggest that automakers should take responsibility for the sales losses of auto dealers. "With the rapid development of the Chinese auto market, automakers have earned a lot of money over the years, and auto companies should loosen their dealers and let themselves out. Part of the profit, helping dealers to tide over the difficulties."

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