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In the environment of the rapid growth of China's automobile industry in the past decade, as long as it is accurately invested in the best-selling joint venture brands, it can basically have a good profit, even the more ordinary domestic brands will not lose money. However, as China's automobile market has shifted from the incremental era to the stock era, it seems that whether the dealers can make a profit can only rely on luck.

According to enterprise information, 1345 car dealers have been registered and cancelled nationwide in less than half a year from January to May 12, 2020, which is similar to that of last year.

According to the 2019 China Automobile Dealers Development report, last year, under the influence of the clearance of national five models, the car market led to substantial profits in terminal retail, with dealers' losses reaching an all-time high of 44%. In the second half of the year, with various factors of recovery, the loss of dealers narrowed to 42%. In the whole year, there were about 3000 dealers out of the net, accounting for 10% of the total.

Until 2020, under the continuous impact of the COVID-19 epidemic, this has undoubtedly made the dealers who have been under great pressure even worse. According to the show, in these nearly 1400 car 4S stores, nearly 60% of the enterprises were founded within 3 years, so under the heavy crisis, there are no more dealers with experience in capital, which undoubtedly become the first batch of enterprises that can not bear it.

In the past, some people said that as long as you invest in Volkswagen dealers, you can basically make a profit, but according to the first-quarter production and sales report released by SAIC a few days ago, SAIC-Volkswagen sold only 183000 vehicles in the first quarter of 2020, down 60.9% from a year earlier. Although the sign of decline is the same pace of major car companies this year, SAIC-Volkswagen has significantly outperformed some car companies and the average. Its first-quarter results show that

Some netizens even revealed that the "oldest" SAIC-Volkswagen 4S store in Hebei Province had withdrawn from the Internet in early April this year. Informed sources revealed that the dealer does not have any contradiction with the manufacturer, the geographical location is good, but can not bear to lose money all the time, so he chose to withdraw from the net. Therefore, SAIC-Volkswagen, as an excellent domestic joint venture market, can not resist the impact of the market, let alone those dealers of marginal brands.

Although the luxury market has shown a strong trend from last year to this year, with sales rising against the trend, the profit margins of the major car companies are also relatively low. For example, Beijing Mercedes-Benz, the best performer, sold 110000 new cars in the first quarter, down 24.2 per cent from a year earlier and significantly better than the 40.8 per cent passenger car market. However, it accounts for nearly 90% of Beijing car sales, which also makes Beijing Automobile's net profit plummet by 95.1%. It is conceivable that the profit margin is quite low.

In terms of the profitability of car dealerships in 2019, only 31% of dealers were profitable, 27% were flat, and 42% lost money. And among the profitable dealers, only 10% of the dealers' profit margin showed a net growth trend compared with the previous year, and 15% of the dealers' profit margin was lower than that of the same period last year, which also reflects the declining trend of dealer profit margins year by year.

Of course, there are also many sales of new energy vehicles for dealers to withdraw from the network. due to the development environment of accelerating the development of new energy vehicles a few years ago, China's new energy market has grown rapidly, reaching 507000 vehicles in 2016, an increase of 53.0% over the same period, so that a large number of dealers choose to enter, but with the rapid decline of the market. This group of dealers who chose the new energy market undoubtedly suffered a big blow and chose to leave.

However, there was a marked rebound in the market in April, with data showing that car production and sales completed 2.102 million and 2.07 million respectively, up 2.3 per cent and 4.4 per cent respectively from a year earlier. China's auto market finally ended its decline after 21 consecutive months. It means that dealers who "get over it" will achieve a certain performance improvement with the increase of market demand and the recovery of consumer confidence. It's just that it's still hard for dealers with marginal brands this year.

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