Circulation Association: More than half of dealers will achieve profitability in 2021, used cars will become a new growth point

"In 2021, the proportion of dealers who achieved profitability reached 53.8%, and the proportion of dealers who lost money accounted for 17.5%, and the profitability was significantly improved." On February 10, when releasing the 2021 national auto dealer survival survey report, Lang Xuehong, deputy secretary general of the China Automobile Dealers Association, pointed out.

According to the "China Business News" reporter understands, in 2021 repeated epidemic, chip shortage and other issues led to the shortage of some hot vehicle supply, the operation of car dealers has a greater impact, in order to understand the actual operation of dealers in 2021, the pressure and difficulties faced, the China Automobile Circulation Association in early January 2022 launched the 2021 national car dealer survival survey, the investigation object to passenger car authorized dealers, a total of more than 50 dealer groups, 1317 dealers.

This reporter noted that 53.8% of the profitable dealers accounted for the highest value since 2018. According to the survey data released by the China Automobile Dealers Association, the proportion of dealers who were profitable in 2018 was 33.6%, which fell to 29.7% in 2019 and rebounded to 39.4% in 2020.

"In 2021, the shortage of chips led to insufficient product supply, which reduced the inventory of dealers to a relatively low level, digested the inventory, and narrowed the preferential margin, making the profitability of dealers significantly improved." Lang Xuehong said.

However, the profitability of brand dealers in different countries varies greatly, among them, the profitability of Japanese and German brand dealers is higher, and the profitability of American, Korean and French brand dealers is relatively low.

According to the data released by the China Automobile Dealers Association, the proportion of dealers with Profits of Japanese and German brands reached 67.1% and 66.1% respectively, and the proportion of dealers with profitable independent brands was 42.1%. Among them, nearly 80% of dealers of luxury/imported brands have achieved profitability.

The business segments of automobile dealers generally cover new car sales, after-sales service, second-hand car trading, insurance finance, decoration, etc. Judging from the results of the survey by the China Automobile Dealers Association, in 2021, in the profit structure of dealers, the proportion of new car profit contribution increased significantly, from 4.2% in 2020 to 12.9%, and the profit contribution of after-sales and second-hand cars also increased slightly, reaching 51.3% and 3.2% respectively, while the profit proportion of auto insurance finance fell to 19.6%, and the profit proportion of other sectors such as boutique decoration fell to 13.0%.

From the perspective of the gross profit margin of each business segment, the gross profit margin of used cars has increased the most. Relevant data show that in 2021, the gross profit margin of used cars increased from 5.1% to 8.5%, the gross profit margin of new cars increased slightly from 1.2% to 1.3%, and the gross profit margin of after-sales sales decreased from 40.3% to 35.9%.

Lang Xuehong analyzed that the increase in the gross profit margin of second-hand cars is mainly due to the fact that after the tax reduction of second-hand car distribution in 2020, more dealers have carried out second-hand car distribution business, such as Porsche dealers who transfer the acquired vehicles directly to the name of the store to carry out formal second-hand car distribution business, rather than batch sales to car dealers as before, and the retail gross profit of the distribution model is significantly higher than the gross profit of wholesale sales.

In recent years, the mainland has continuously increased its efforts to support the development of the second-hand car market at the policy level, such as the tax reduction and inter-provincial general office policy for second-hand car distribution, which has effectively solved the problems of high transaction costs, long cycles and inconvenience in different places, which has also promoted more dealers to carry out second-hand car distribution business. However, due to the absence of some supporting policies, it restricts the further development of the second-hand car market.

"In the survey, dealers reflected two levels of demand for the used car business. First, at the policy level, dealers focus on the hope that cars with emission standards above the national five can be circulated nationwide, and at present, in first-tier cities such as Beijing, they can only move to the national sixth B, which is the same as the standard of new cars, which seriously restricts the circulation of second-hand cars. At the same time, on the basis of the policy of inter-provincial communication office last year, it is hoped to further simplify the process of off-site vehicle inspection and promote the nationwide inter-provincial communication office as soon as possible. Lang Xuehong said that some cities now have household registration restrictions on the purchase of second-hand cars, and they also hope to lift the restrictions on household registration. In addition, it is hoped that the attributes of used car commodities will be determined as soon as possible to reduce the financing cost of used cars and accelerate the flow of used cars. At the same time, it calls for the introduction of policies to solve the problems of second-hand car insurance difficulties and scalpers selling second-hand cars.

"Second, at the factory level, dealers hope that automakers will increase their support for the used car business, increase the publicity of used cars certified by manufacturers, and hope to increase the used car display area in the existing display area, and there can be more used car display spaces in the exhibition hall, and increase subsidies for second-hand car retail." Lang Xuehong mentioned.

In recent years, used cars have become a new growth point for dealers and the entire car market. Public data shows that in 2021, the mainland traded 17.585 million used cars, an increase of 22.6% year-on-year. Luo Lei, deputy secretary-general of the China Automobile Dealers Association, expects that the trading volume of used cars on the mainland will exceed 19 million in 2022.

For the expectation of the sales scale of the mainland automobile market in 2022, dealers are generally optimistic. Lang Xuehong said that 90% of dealers believe that car sales will maintain positive year-on-year growth in 2022. Because of last year's chip shortage and insufficient supply, dealers at the beginning of the year inventory level is relatively below the warning line, December 2021 inventory compared to the beginning of the year, dealer inventory overall reduced by 1 million vehicles, in 2022, if the manufacturer has some high-quality models to the market, dealers are still confident that they can have a better sales performance.

(Editor: Zhang Shuo Proofreader: Yan Jingning)