AutoBeta(AutoBeta.net)08/22 Report--

On August 21, the China Automobile Circulation Association released the investigation report on the living conditions of National Automobile Dealers in the first half of 2024, and the difficulties and pressures of the automobile back-end market were once again put on the surface. The promotion of the "trade-in" policy has further stimulated market activity and enhanced consumer confidence, and the automobile market continued to maintain growth in the first half of the year, especially new energy vehicles continued to maintain rapid growth and penetration continued to increase, the report said. However, the strategy of "price for quantity" also makes mainframe factories and dealers have to face the severe challenge of declining profit level. with fierce market competition and frequent price wars, brand manufacturers and dealers compete for the market by means of price reduction and promotion. in order to achieve the sales target.

According to data from the Federation of passengers, domestic sales of narrow passenger cars in the first half of 2024 were 9.839 million, an increase of 3.2 percent over the same period last year, of which 4.113 million were new energy passenger vehicles, an increase of 33.2 percent over the same period last year. Generally speaking, the growth rate of new energy vehicles is much higher than that of the overall market, which means that new energy vehicles are the main driving force for the growth of China's car market. Without the stability of new energy vehicles, the overall market may decline.

According to data released by the China Automobile Circulation Association, only 28.8% of dealers achieved their half-year sales targets in the first half of the year, while the percentage of dealers with a target completion rate of less than 70% still reached 33.3%. Among them, the luxury / import brand dealers achieved the target well, 44.8% of the dealers achieved the annual sales target, while the target completion rates of joint venture brands and independent brand dealers were 20.8% and 23.1%, respectively.

The sales performance of most car dealers fell short of expectations. On the one hand, the excessive annual sales target of manufacturers leads to the imbalance between supply and demand in the automobile market, and multiple factors lead to a number of large-scale and substantial price cuts of new cars, which makes consumers wait and see and restrain the release of consumer demand. On the other hand, with the growth of new energy vehicles and the contraction of the fuel vehicle market, some dealers are facing a situation of weakening product competitiveness, which is mainly manifested by serious upside-down prices of new cars, chaotic market prices and lack of continuity of manufacturers' policies. tying and warehouse pressure occur from time to time, resulting in increased pressure on dealers.

In addition to the fact that most of the dealers failed to meet their annual sales targets, large-scale losses have also become the development status of dealers in the first half of the year, and the overall dealer losses are at a high level in recent years. According to a survey conducted by the association, only 35.4% of dealers made a profit in the first half of the year, while the proportion of loss-making dealers reached 50.8%, and the proportion of break-even dealers was 13.8%.

Dealers' satisfaction with the mainframe factory also hit a 10-year low. According to the association, the overall satisfaction score of automobile dealers to the mainframe factory in 2023 was 71.7, the lowest since 2013, and fell to 69.7 in the first half of 2024. The overall satisfaction of dealers to manufacturers has decreased significantly, mainly manifested as serious upside-down prices of new cars, chaotic market prices, lack of continuity of manufacturers' policies, tying and pressure on warehouses, and so on, resulting in increased pressure on dealers' operation. a large number of dealers are losing money or on the verge of loss.

At present, the automobile industry is facing difficult challenges, and the government, associations and enterprises are all working hard to promote the recovery of the market. Many promotion fee measures, such as state tax cuts, local government subsidies, and factory support, have a strong pulling effect on the consumer side of demand and accelerate the recovery of the automobile market. In the context of this year's "trade-in" policy and a more fierce price war, car brands and dealers have reduced prices and promoted sales in exchange for sales, and the reality of shrinking profit margins is behind maintaining sales.

As early as the beginning of this year, there have been frequent thunderstorms, financial crises, shop closures, delisting and other news in large dealer groups, and car dealers as a whole are under tremendous pressure of survival. Recently, many car dealers have encountered operational difficulties.

Although it will take a long time for new energy vehicles to replace fuel vehicles, and the head brand transformation in the traditional fuel vehicle era will not soon lose its sales position in China, new energy vehicles as an important direction of China's automobile development and transformation, there have been more and more second-and third-line joint venture brands reselling new energy vehicle brands, with the continuous expansion of the new energy vehicle market and the continuous upgrading of consumer demand. More and more traditional dealers begin to pay attention to the Internet game. the rise of this model has brought great changes to the traditional car dealers, and the distribution market environment is getting worse and worse. in the changes in the market, there are more and more requirements for dealers to transform and upgrade and adapt to the new sales model and service model. Generally speaking, electric cars are the direction of automobile development in the future, and they will not change the lives of front-line traditional dealers in the short term, but what is certain is that the best days for dealers are over, and the days to come will become more and more difficult.

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