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In 2019, under the influence of the clearance of national five models and the continuous shrinkage of the market, the terminal retail made a substantial profit, and the loss of dealers reached an all-time high of 44%. Since 2020, the car market has been hit by the epidemic, leading to a further decline in national car sales, which should have been worse than the previous year, but the final figures show that nearly 40% are still at a loss.

Compared with the first half of 2019, dealers' losses reached an all-time high of 44%, and the proportion of profitable dealers was only 29%. The overall performance of 2020 was better than that of the previous year, but the situation is still not optimistic. According to the "investigation report on the living conditions of Automobile Dealers" released by the China Automobile Circulation Association, 38.3% of the dealers lost money in the first half of this year, and 21.5% of the dealers made a profit, which means that 61.7% of the dealers did not lose money this year, up from 56% last year.

However, according to the report, overall dealer satisfaction continued to decline in the first half of 2020, with a score of 76.0, compared with 77.1 at the end of last year, indicating the increasing pressure on dealers to survive after the epidemic.

According to specific brands, the satisfaction of luxury / imported brands is higher, with a score of 84.3, an increase of 1.8 percentage points over the previous year, while both joint venture brands and independent brands have declined to varying degrees, of which the lowest share of independent brands is only 71.2 and that of joint venture brands is 74.

According to the analysis of the association, dealers' satisfaction with profitability is the lowest, mainly due to the high task index of manufacturers, inventory pressure and other reasons. The market decline accelerated by COVID-19 epidemic in 2020, the pressure on the survival of dealers increased, in addition to inventory and other issues, the business policy is not flexible enough, the current business situation of dealers is not fully considered. At the same time, some independent enterprises have a single product line and slow response to the market, resulting in a continuous decline in the satisfaction of independent brands.

For dealers who accounted for 21.5% of profits in the first half of this year, 60% came from luxury / imported brand dealers. This also shows that with the current market in the environment of consumer upgrading and joint venture brands falling by the price of luxury brands, consumers are gradually inclined to luxury brands in their choice, making luxury brands easier to sell, and the trend of differentiation in the car market is becoming more and more obvious.

Compared with luxury brands, the overall performance of the joint venture brand market this year is not as good as the former, and the situation of "price upside down" is also more serious. In 2019, 20.1% of dealers did not have price inversion, but only 16.3% did not have price inversion in the first half of 2020.

In the view of Lang Xuehong, deputy secretary general of the Circulation Association, this situation is mainly due to the dual pressure of joint venture brands under downward price of luxury brands and upward price of high-end models of independent brands, resulting in repeated decline in transaction prices.

In addition, the decline in both sales and profits has caused more and more dealers to collapse one after another. According to the Circulation Association, the total number of passenger car dealers in the first half of 2020 was 29773, down 0.7 per cent from the end of 2019. Among them, the number of dealers who chose to withdraw from the network is 1019.

Although the most difficult time in the first half of 2020 has passed, as the market gradually recovers, the domestic car market has rebounded strongly for three consecutive months from April to June, achieving year-on-year growth. However, most car dealers are still not optimistic about the trend of the car market this year. Lang Xuehong said that only 29 per cent of dealers expected to achieve positive growth for the whole year. Therefore, 2020 is still a "difficult" year for the automobile industry.

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