A large number of 4S stores have closed down, new cars can't be sold, after-sales sales are not profitable, and they can't go on!

On January 11, the China Association of Automobile Manufacturers (CAAM) announced its 2023 automobile production and sales figures. In the past year, the production and sales of automobiles on Continental have exceeded 30 million units, hitting a record high. Among them, the number of automobile exports reached 4.91 million units, making it the largest automobile exporter for the first time.

Contrary to the booming trend, only 37.4% of auto dealers will complete the annual sales target in 2023, which means that more than 60% of the stores have not completed the task. What's even more terrifying is that 23.2% of the stores have a task completion rate of less than 70%. It can be seen that even if the market recovers or even grows significantly, 4S stores still can't sell cars and are struggling. In fact, in the past three years, more than 5,000 auto 4S stores in China have closed down, which is a staggering figure.

Why are the 4S shops so miserable? Do they still have a chance to regain their glory? Let Kung Fu Motors take you to see it.

(1) New cars can't be sold, and after-sales sales are not profitable

The full name of the 4S store is the 4S store of automobile sales and service, which actually represents the four modes of automobile service, namely vehicle sales (Sale), after-sales service (Service), spare parts (Sparepart) and information feedback (Survey).

To put it simply, there are two ways to make money in 4S stores, that is, to make money by selling cars and making money by maintenance, and now there are problems in both of these ways.

The first is to sell cars, and the most heard news in the automotive industry in the past year is probably the "new car price reduction wave". A mid-level car of a joint venture brand used to be sold for 250,000 yuan, but now it can be landed for basically 200,000 yuan, which is a full 50,000 yuan. Among them, car companies have borne most of the losses, such as the previous profit of 30,000 yuan has dropped to 10,000, but the loss of dealers is also huge. In the past, you could earn 5,000 to 15,000 by selling a car, but now many cars are making small profits or even losing money.

This is definitely not alarmist, with the fierce competition in today's automobile market, the price war between car companies is rising one after another. As a 4S store as a sales terminal, the pressure can be said to be the greatest. This price is not sold, and consumers immediately move on to the next one. Moreover, the market is changing rapidly, and if you are not careful, it will become a "pressure warehouse".

In the past, 4S shops also had a period when they did not make money by selling cars, but they could often earn back through "decoration", "financial services", and "after-sales maintenance". But with the improvement of awareness, there are fewer and fewer consumers who eat this set.

Taking maintenance as an example, the price of the previous 4S store was often three times that of other third-party stores, which can be said to be the existence of huge profits. Rao is so, most of the "careful" consumers still choose to maintain in the 4S store, the reason is also very simple, that is, rest assured. However, with the increasing popularity of automobiles, the service of 4S stores has no obvious advantages over third parties, and even many times is not as transparent as third parties. In this case, many consumers have chosen to leave the 4S store.

Cars can't be sold or don't make money, more and more consumers don't eat the "routines" of decoration, and the ability to make money after sales has also greatly declined, which has led to the difficulty of today's 4S stores.

(2) The impact of the direct sales model, the 4S store is a loss-making business?

The 4S store model emerged in 1998, when the main focus was on luxury and comfortable environment. For people in the 90s and 00s, "visiting 4S stores" is still a very foreign thing. The effect is also very good, which not only helps car companies open up their popularity, but also makes dealers make a lot of money.

But this premise is actually based on the high profit of automobiles.

Because of the very complete service functions, the area of 4S stores is often very large. The annual rent of opening a 4S store is 200,000-500,000 yuan/year, and the cost of building a store is often more than 10 million. Then the S store also has to stock up on a large number of auto parts and equipment, which is not a small expense.

In addition to these hardware investments, 4S stores also need a large number of staff, including sales, after-sales, urgency, management personnel, etc., which are also a large investment. Basically, the investment in opening a 4S store is about 20 million, and some large flagship stores are not capped.

But judging from the current sales situation, not to mention making a lot of money, most 4S stores are desperately reducing their staff, just to maintain basic overhead operations. What's more deadly is that the emerging direct sales model can be said to be a dimensionality reduction blow to the 4S store model.

First of all, from the perspective of the audience, the direct stores of the new forces are often opened in the more prosperous city center, and the decoration is more eye-catching in all aspects. With more people only selling cars and displaying products, the footprint of directly managed stores tends to be very small, and the staff is also greatly reduced. Because it is factory direct sales and direct service, it is often more transparent than 4S stores before and after sales, and the trust of consumers is higher.

One is that it spends a lot of money and has a poor consumer perception. One is to spend a small amount of money, but also to enhance the brand's identity by the way. In this battle, the 4S store model can be said to have lost completely.

Of course, at this stage, the direct sales model still cannot completely replace the distribution model. After all, the power of the direct sales model is highly concentrated in the headquarters, which will inevitably lead to the enthusiasm and creativity of the store staff is greatly restricted. In addition, the direct sales model occupies a lot of funds, and it is still very difficult to penetrate into the lower market.

Nowadays, the head of new energy vehicle companies, such as BYD and Aion, actually adopt the "dual-track system" of direct sales and distribution, and the two compete with each other to supervise each other, but have achieved good results and reached a new balance.

(3) Huawei draws salaries from the bottom of the kettle, and 4S stores may be in trouble?

As mentioned earlier, although the 4S store model is now difficult, the direct sales model cannot replace the 4S store model for the time being. Of course not, some new changes may lead to a catastrophe for 4S stores.

Recently, it was reported that Huawei Hongmeng Zhixing has taken the initiative to suspend its cooperation with the three major domestic automobile portals (Autohome, Chedi, and Yiche.com), and almost overnight, all the store retention channels for Huawei models have been taken off the shelves.

As one of the largest domestic traffic enterprises, most of Huawei's traffic comes from its own propaganda and guidance. In other words, although consumers are accustomed to looking at the parameters of new cars on the portal, the achievement of car purchase intentions comes more from trust in Huawei. Nowadays, the biggest change is nothing more than that everyone has to go to the official website of Hongmeng Zhixing to see the parameters. Although there will be some labor pains, the impact will not be as great.

So if Huawei does this, will Xiaomi keep up? Will Internet celebrity brands such as Tesla and Ideal follow suit? Will brands such as BYD and Geely, which are already relatively large in size, follow suit?

Portals used to be one of the most important sources of income, and it is likely to be fatally impacted to attract traffic to offline stores. Because car companies may not use it to attract traffic, just like the mobile phone industry in the past.

In this case, there is only one way for the portal to go, that is, to contract online and offline by itself and make a car service complex. Make up for what large car companies are unwilling to do and small car companies are unable to do. In terms of marketing and publicity, the car service complex with the theme of the portal is undoubtedly far better than the 4S store. At the same time, the former can also "sell what is hot", without being shackled by a single brand like a 4S store.

Whether it is car companies, consumers, or these service platforms for survival, I am afraid they are happy to see the 4S store model enter history.

(4) Kung Fu shooting

A few days ago, Kung Fu Motors talked to friends about the changes in the automotive industry, and the biggest emotion was, "The only thing that remains constant is that it is always changing". The time for joint venture car companies to lie down and make money is about 30 years. The time for 4S stores to make money lying down is about 15 years. Taxi drivers in the 90s earned more than gold collars, and truck drivers in the 00s earned more than college professors. But all this seems to have passed.

We don't need to feel too much, the elimination of a model is nothing more than because of the emergence of more advanced and economical service methods, goodbye 4S stores.