Author 丨Du Qiaomei
Editor 丨 Zhang Ruosi
Figure Source 丨 Figure worm
After three consecutive years of decline, China's auto market finally returned to positive growth in 2021.
Despite the repeated epidemics and uncertainties such as chip shortages, in 2021, mainland automobile production and sales reached 26.082 million units and 26.275 million units, respectively, up 3.4% and 3.8% year-on-year.
Among them, full-caliber passenger car sales in 2021 were 21.323 million units, up 6.2% year-on-year, but down 1.6% from 21.662 million units in 2019.
Thanks to the gradual recovery of China's automotive industry, the gross profit margin of new cars in automobile dealers will turn positive in 2021, and the operating conditions have improved.
On February 10, the "2021 National Dealer Survival Survey Report" released by the China Automobile Dealers Association showed that 70% of dealers completed more than 80% of the annual task indicators; the proportion of dealers who completed the annual sales target was 29.4%; from the perspective of profitability, the profitability of dealers rose to 53.8% in 2021, and the loss surface fell to 17.5%, compared with 2020, the profit side increased by nearly 15 percentage points, while the loss side fell by 16 percentage points.
In addition, although the inversion of dealer new car sales prices still exists, it is significantly better than in 2020. The proportion of dealers without price inversion increased by 2.9 percentage points to 29.4%, and the profit from dealer new car sales increased, from 1.3% in 2020 to 1.5%.
However, in 2022, under the influence of repeated epidemics and chip shortages, there may be insufficient support in the short-term market, and dealers are still facing risks such as insufficient market demand, reduced passenger flow, insufficient resource supply, and declining after-sales profits.
Market demand weakened and inventory levels picked up
According to the latest issue of the "China Auto Dealer Inventory Alert Index Survey" VIA (Vehicle Inventory Alert Index) released by the China Automobile Dealers Association, the inventory warning index of Chinese auto dealers in January 2022 was 58.3%, down 1.8 percentage points year-on-year and up 2.2 percentage points month-on-month, and the inventory warning index was above the boom-bust line.
The higher the inventory warning index, the lower the demand in the market, the greater the inventory pressure, and the greater the operational pressure and risk.
This also means that although the supply of cars has stabilized into 2022 and dealer inventory levels have rebounded, they have not yet returned to normal levels. The mismatch between supply and demand caused by low inventories still needs some time to adjust.
"From a data point of view, the inventory warning index in January this year is closer to the boom-bust line than in 2020 and the same period in 2021, but approaching the boom-bust line does not mean that the market has reached the ideal level." Qiu Kai, director of the Industrial Coordination Department of the China Automobile Dealers Association, said that from the feedback from dealers, compared with previous years, consumers' demand and enthusiasm for car purchases before the Spring Festival have weakened.
"On the one hand, in January 2021, the demand for car purchases after the epidemic was rapidly released, and the market as a whole continued the trend of recovering growth in 2020; at the same time, the impact of chip shortage in the same period last year was not fully revealed, so the sales of new cars reached 2.36 million units in January last year. On the other hand, this year's Spring Festival is earlier than in previous years, and some consumer demand has been released ahead of schedule in December last year; the repeated epidemic and chip shortage in January have affected the supply of tight models and dealer gathering. Qiu Kai further pointed out.
Judging from the sub-index situation, the inventory, market demand and average daily sales index in January fell sharply, and the overall demand and sales trend of the automobile market were weak.
"In January, dealers as a whole were in the stage of digesting inventory at the end of the year, so the inventory index was declining. From the perspective of market demand, in the first half of January, the overall demand for car purchase was relatively strong, which was manifested in an increase in the number of customers with limited mentions; in the second half of the month, near the Spring Festival, the demand gradually weakened. From the perspective of sales volume, consumer demand for existing cars increased in January, and there was a certain contradiction between supply and demand due to the shortage of dealers. Coupled with the impact of the epidemic on consumers entering stores and vehicle deliveries, the sales index declined in January. Qiu Kai said.
It is worth noting that in January 2022, the auto consumption index fell off a cliff and fell to 25.4, which is close to the lowest point in nearly three years. Among them, the demand sub-index in January 2022 is only 18.7.
Considering that some dealers continue to rush sales before the Spring Festival, and the actual sales volume converted into January of the reserved orders in December 2021, the China Automobile Dealers Association expects that the sales of full-caliber passenger cars in January 2022 will be the same as that in December last year, about 2.3 million units.
February sales are expected to decline by 40% month-on-month
"After the peak season for car purchases in December last year and January this year, sales in February are likely to deteriorate, and the dealer inventory coefficient is expected to increase month-on-month next month." Qiu Kai expected.
During the Spring Festival, automobile sales activities were suspended, resulting in a decrease in the number of car sales days in February, affecting automobile sales; after the holiday, consumers returned to work one after another, from the holiday mode to the working mode, and the willingness to buy cars during this transition period was affected, and the demand release of the automobile consumer market was also affected.
At the same time, February is the traditional trough of automobile sales, low automobile sales, coupled with the recent epidemic sporadic sporadic, increased epidemic prevention and control efforts, and restrictions on the movement of people in some areas have inhibited automobile consumption.
According to the survey, more than 70% of dealers said that the market demand declined in February, mainly due to the demand for car purchases has been released before the holiday, the consumption power of demand after the holiday has declined, resulting in a decline in transaction volume, and due to the impact of the epidemic, the market demand recovery period is longer than usual.
The traditional sales off-season, the vacuum period after the Spring Festival, and the impact of the recurrence of the epidemic, the short-term market support is insufficient; coupled with the chip problem may last until the second half of this year to be fully resolved, the association expects full-caliber passenger car sales in February this year to be about 1.4 million units, down about 40% month-on-month.
However, with the gradual easing of the chip crisis and the listing of new products, dealers are generally optimistic about the annual sales scale in 2022, 90% of dealers believe that 2022 will maintain positive year-on-year growth, of which 40% of dealers believe that they can achieve more than 10% growth; only 10% of dealers believe that the overall sales will decline in 2022.
More than half of dealers will be profitable in 2021
On February 10, the China Automobile Dealers Association released the 2021 National Automobile Dealers Survival Survey Report, which investigated and summarized the operation of automobile dealers throughout the year.
Overall, dealers' satisfaction with OEMs, sales target completion and profitability have increased significantly throughout 2021; however, dealers are also facing risks such as loss of personnel, reduced passenger flow, insufficient supply of resources due to chip shortages, and decline in after-sales profits.
"A large number of personnel lost to other industries, the loss of new forces, which also makes the cost of personnel continue to increase; in the first half of this year, it is expected to be caused by the shortage of chips caused by insufficient supply, supply shortage problems, some high-quality resources can not meet the sales demand, which is also a challenge for dealers." In addition, it is mentioned that the quality of the collecting customers and the amount of clues are insufficient, which is also the relatively large pressure on the dealers. Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, said.
In addition, with the advent of the trend of electrification in the automotive industry and the innovation and transformation of the channel model by OEMs, traditional authorized dealers are also facing new choices.
Nearly 30% of dealers have completed their annual sales targets
The report shows that despite the repeated epidemic situation, chip shortage and other uncertainties, 70% of dealers still completed more than 80% of the annual task indicators; the proportion of dealers who completed the annual sales target was 29.4%.
Among them, the annual target of luxury/import brand dealers is better, with nearly 40% of dealers completing the annual sales target; among the joint venture brands, nearly 30% of the dealers have completed the annual sales target.
However, the survey found that the inversion of the sales price of new cars at dealers still exists, but it is significantly better than in 2020. The proportion of dealers who did not have price inversions rose 2.9 percentage points to 29.4%.
"Sales of new cars in 2021 ended the continuous decline since 2018 and resumed positive growth, sales of passenger cars increased year-on-year, and the overall sales scale of dealers increased." Lang Xuehong said, "The situation of price inversion has improved significantly, mainly due to the shortage of chips caused by the shortage of new cars, which objectively helped dealers digest inventory, especially in the third quarter, so the overall preferential margin and price discount have a significant narrowing." ”
In addition, most dealers are optimistic about the market in 2022, 90% of dealers believe that 2022 will maintain positive year-on-year growth, of which 40% of dealers even think that they can achieve more than 10% growth; only 10% of dealers believe that sales will decline in 2022.
Dealer profitability has risen sharply
Due to the shortage of chips, the supply is insufficient, which is conducive to dealers digesting inventory and narrowing the profit margin. From the perspective of profitability, the profitability of dealers rose to 53.8% in 2021, and the loss surface fell to 17.5%.
It is worth noting that in the first half of 2021, the proportion of profitable dealers was only 33.6%.
Among them, the overall profitability of luxury/imported brands is better, nearly 80% of dealers achieve profitability, and the profitable dealers of joint venture brands and independent brands account for less than 50%.
"Among luxury brands, Mercedes-Benz, BMW, Audi, Porsche and other brands are very profitable. Among the 10 luxury brand dealers, 8 are profitable, only a few are flat or loss-making; among the joint venture brands, the Profitability of German and Japanese is relatively good, and the profitability of the United States, South Korea and France is relatively low; among the independent brands, Geely, Changan, BYD and other brand dealers also have very good profit performance. Lang Xuehong pointed out.
In the profit structure of dealers, the proportion of new car sales profit has increased significantly. Although the repeated epidemics and economic downturns have affected the consumer market, the "short supply" of automotive products caused by the shortage of chips has narrowed the preferential margin of terminals, and the profit of new car sales of dealers has increased, from 1.3% in 2020 to 1.5%.
However, after the 919 insurance premium reform, the insurance commission income of dealers has dropped significantly, coupled with the tightening of insurance company policies, the profitability of insurance business has declined, and the proportion of profits of dealers' financial insurance business has decreased significantly.
It is worth mentioning that the gross profit margin of used cars increased by 3.4 percentage points to 8.5%, and under the impetus of favorable policies in the used car market, dealer groups actively laid out the used car business and achieved initial results.
"In 2021, the second-hand car business has become a new profit growth point for dealers, although dealers have begun to try the second-hand car distribution business, but there are still some supporting policies in place." Lang Xuehong pointed out, "At the policy level, second-hand cars with emission standards above the 'National Five' have not yet been circulated in the country, and first-tier cities such as Beijing can only move into the 'National Six B', which seriously restricts the circulation of second-hand cars; at the same time, dealers call for cross-provincial general offices to further simplify the process of off-site car inspection on the basis of the policy of inter-provincial communication, promote nationwide inter-provincial communication, and determine the attributes of second-hand car commodities as soon as possible to accelerate the circulation speed of second-hand cars; in addition, the problem of second-hand cars is still facing difficulties in insurance. ”
Sales channels "in and out"
Throughout 2021, multiple factors such as repeated local epidemics and untimely supply of vehicles caused by chip shortages have disrupted the pace of sales and increased the difficulty for dealers to cope with market changes. At the same time, the high cost of customer acquisition and the reduction of passenger flow are the core pain points of dealers.
With the rapid development of the new energy market, the rise of new power brands, especially the substantial growth in sales of new energy passenger cars in 2021, has caused a great impact on the fuel vehicle dealer group, and also brought about the debate on the channel model.
"It is difficult for dealers to participate in the direct operation model, but for the authorization model and the agency model, dealers also have different concerns." Lang Xuehong pointed out that for investing in new stores, dealers are more inclined to the authorization model, mainly because they are more familiar with the authorized business model and have stronger autonomy, and can independently carry out related businesses. For the agency model, the investor's investment is correspondingly reduced, without bearing inventory, and the operational risk is reduced, but the user maintenance and control of the channel will also be reduced.
Of course, for both models, dealers also have different degrees of concern.
For the licensing model, since 2018, the decline in new car sales has led to manufacturers pressing inventory, the financing costs of dealers are very high, and the financial expenses remain high, which has eroded the profits of dealers; at the same time, due to the fierce price war, the price inversion has also affected the profitability of dealers.
The agency system has greater uncertainty, is controlled by the manufacturer more strictly, the dealer's independent play space is relatively small; in addition, only the commission part of the account leads to a significant decline in the scale of income, it is not easy to become larger, and the derivative business is more difficult to carry out.
"Dealers' future investment intentions are more cautious. Among luxury brands, dealers with new expansion intentions are concentrated in BBA and Lexus; joint venture brands are mainly concentrated in Japanese and volkswagen brands that launch ID. series of pure electric products; independent brands are concentrated in leading enterprises such as Great Wall, Changan, Geely, ANDD; among the new forces, dealers are generally optimistic about Xiaopeng. Lang Xuehong finally said.
Editor of this issue Liu Xueying Intern Lin Xiying