More than 80 4S stores disappeared overnight

Produced by New Products and Finance

Author: Wu Wenwu

A large car dealer suddenly exploded, and more than 80 4S stores disappeared overnight, reflecting the rapid changes in the era of automobile consumption.

01 Another large car dealership suddenly exploded

"New Product Strategy Finance" paid attention to the fact that on January 17, it was revealed on the short video platform, circle of friends and multiple car friend groups that Guangdong Yongao Investment Group Co., Ltd. (hereinafter referred to as Yongao), a large automobile dealer headquartered in Dongguan, suddenly exploded.

Founded in 1997, Yongao is a large-scale automobile dealer group in South China, with stores covering Dongguan, Guangzhou, Shenzhen, Zhongshan, Zhuhai, Huizhou and other cities.

Yongao operates more than 20 domestic and foreign auto brands, including not only traditional luxury car brands such as BBA, but also joint venture brands such as Toyota and Volkswagen, as well as new car-making brands such as Aion, Wenjie, Leap and Lotus.

It is reported that in Lincun Automobile City, Tangxia Town, Dongguan, one-third of the brand 4S stores belong to Yongao.

The news of the explosion of Yongao Group quickly triggered a chain reaction, and the fastest response was the bank.

Short video news shows that some banks sent tow trucks overnight to tow away all the vehicles of Yongao's 4S stores in many towns in Dongguan Liaobu, Tangxia and other towns, and there is no one left, and more than 80 4S stores under Yongao have been seized.

Soon, those consumers who have paid a deposit, or have paid a down payment, and the loan has been approved, but have not yet picked up the car, have gone to the 4S store where they bought the car to check the situation, and the building has been empty.

The sales consultant of a Volvo 4S store under Yongao sent a WeChat message to customers in the middle of the night, saying that more than 80 car brand stores under Yongao Group had an emergency situation and were at risk of bankruptcy and liquidation, of which 28 cars in the Nancheng store had not been paid, and 35 cars had not purchased purchase tax and were waiting for the license, and they had not yet received how to operate.

The sales consultant also said, "At this moment, I feel the same mood as you, you have worked hard to make money and paid, and our employees are waiting for the salary to pay the burden of the family.

The salesman was helpless and anxiously waiting for his salary to be paid. According to public information, Yongao has more than 2,000 employees.

In fact, Yongao has been exposed to arrears of employees' wages since the beginning of 2023, and many employees of Yongao have been exposed on the online platform, and the 4S store has closed down, and the employees cannot be spared.

Yongao used to be one of the top 100 car dealer groups in China, but now because of the rupture of the capital chain, it has exploded like this, and it is reported on the Internet that the boss of Yongao has run away abroad.

In recent years, the news of the explosion of car dealers and 4S stores is no longer heavy news, but the shock wave of the explosion of large dealers like Yongao is still very large.

02 4S店从巅峰到倒闭潮的变迁

Yong'ao once had a glorious time, but now it has collapsed, which is a microcosm of the changing times in the automotive retail industry.

In the last century, the door of reform and opening up was opened, and China's automobile industry entered the era of joint ventures, followed by the modern production and sales model of automobiles, in which automobile manufacturers made cars, dealers sold cars, provided after-sales, and introduced 4S store service models.

Later, with the rapid development of the automobile industry, these 4S stores provided automobile sales services and aftermarket services such as after-sales maintenance, insurance, and auto finance.

At that time, the 4S store was the last link in the industrial chain of China's automobile industry to directly reach consumers, and it also contributed to the development of the entire industry, and car dealers also made a lot of money.

Consumers are to the 4S store for consultation, test drive, order, pick-up and post-maintenance and repair, consumers and 4S stores are deeply bound, and 4S stores lie to earn.

According to data, at the peak of the industry, the total number of 4S stores in the country exceeded 30,000.

In particular, some large-scale automobile dealer groups can be called "money printing machines", and large automobile dealer groups such as Zhongsheng and Pangda have been listed successively, and the scenery is unlimited for a while.

However, since 2015, the phenomenon of 4S store closures has begun to appear, and since 2019, there has been a wave of 4S store closures, and in the past two or three years, the wave of 4S store closures has accelerated.

According to public data, nearly 1,400 4S stores across the country will close down in 2021, and the number of 4S stores that will close in 2022 has reached more than 4,000.

According to the data of the Passenger Association, in 2022, 40% of dealers will go bankrupt, and more than half of the auto 4S stores will be in a loss-making state at that time, with an average of about 11 4S stores closing every day.

The business difficulties of auto dealers have long been directly reflected in the financial reports of listed dealer companies.

Zhongsheng Holdings, Guanghui Automobile, Yongda Automobile, Pangda Group and many other listed auto dealer groups have experienced a double decline in revenue and net profit in recent years. On June 30, 2023, Pangda Group, which was once the "king of 4S stores", was delisted.

There is no doubt that in 2023, a large number of 4S stores have fallen, among which the joint venture brand 4S stores are the protagonists.

The Yongao explosion is not the last car dealer group to fall, which directly reflects that more 4S stores are accelerating their disappearance, which is already an irreversible trend.

03 Why were 4S stores abandoned?

So, who is the 4S store abandoned? The answer to this question should start from the Internet PC era.

In the era of Internet PC, car portals such as Autohome and Yiche have appeared, and consumers have one more window to understand information, but they have to go to 4S stores to buy cars and after-sales.

The biggest impact of the Internet on 4S stores is the great improvement of information transparency, which is the first impact of Internet technology on 4S stores.

It was not until July 2013 that Tesla entered the Chinese market and opened the first Tesla Experience Center in Parkview Green, Beijing, which gradually changed the Chinese auto retail industry.

Tesla's direct sales model, customers experience in the experience store, place orders online, and then pick up the car at the delivery center, breaking the traditional car retail model and eliminating middlemen.

Unlike traditional 4S stores in suburbs, automobile cities, and urban fringes, Tesla directly opens experience stores in city centers and shopping malls to directly reach consumers.

Later, in the era of new energy vehicles, a number of new car-making forces such as Ideal, Weilai, and Xiaopeng directly imitated Tesla and opened experience stores in shopping malls, office buildings, and Internet celebrity business districts in the central area of the city.

The marketing, experience and car purchase model of Tesla and the new domestic car-making brands have completely subverted the distribution service model of traditional 4S stores, which is the second impact of the new retail service model of automobiles on traditional 4S stores.

Later, mobile phone manufacturers began to build cars, such as Wenjie into Huawei stores, and the upcoming Xiaomi cars will also be exhibited and sold in Xiaomi mobile phone stores, which also directly affects traditional 4S stores.

What has a more far-reaching impact is that the new retail model of new energy vehicles has deeply changed the business model and profit structure of the entire industry.

The main income of the 4S store is not to sell cars to make the difference, but the manufacturer's rebate and after-sales service.

Nowadays, new car-making forces such as Li and NIO are the first to break through the pricing logic of traditional auto brands and directly target the mid-to-high-end and luxury car markets, especially in 2023, with the emergence of high-end models such as BYD's Denza brand and Huawei's Wenjie M9, further changing the market.

China's new energy vehicle brands have stolen a lot of market share from traditional luxury car brands, and the performance of traditional luxury car brands such as BBA in the new energy model market has been mediocre, which has made the business of traditional 4S stores even worse.

China's auto consumption has entered a younger era, and young people have turned to buy new energy vehicles, and most of them prefer Chinese new energy vehicle brands, which are abandoned by young people, further accelerating the decline of traditional 4S stores.

According to a national auto dealer survival survey report released by the China Passenger Car Association in 2022, less than half of dealers achieved their sales targets that year, and only 29.7% of dealers made a profit.

There is no doubt that the survival situation of the vast majority of 4S stores will definitely deteriorate further in 2023.

"New Product Strategy Finance" concluded that Internet technology, the new retail model of new energy vehicle direct sales, and the change in the consumption structure of new energy vehicles in China as a whole behind it have impacted and affected 4S stores.

04 4S stores, which do not keep pace with the times, can only be abandoned

If it is said that the impact of market changes is the external factor affecting 4S stores, in the view of "New Product Strategy Finance", another more critical reason for the accelerated decline of 4S stores is in thinking.

Under the traditional 4S store model, although the 4S stores of different positioning car brands have different consumers, there is no essential difference in the service model, and the service level is far from the same.

On a weekend last month, "New Product Strategy" went to the 4S store of a joint venture automobile brand in Tangxia, Dongguan, and originally wanted to test drive an MPV.

After three or four years, "New Product Strategy Finance" once again entered the traditional 4S store, and everything is still the same, which directly dissuades many consumers.

On the whole, the service model, service standards, service attitude, and even service reputation of traditional 4S stores are still stuck in the past, standing still, and there is no obvious progress.

In the final analysis, the era of 4S stores waiting for customers to buy cars has long passed, and there is no change according to the changes in the current market environment.

Of course, there are only a few luxury brands that still maintain consistent service standards and reputation.

In recent years, traditional automaker brands have also begun to rejuvenate, changing their marketing models and opening experience stores in downtown areas in order to reach consumers directly.

Especially in the current era of short video and community grass planting, young consumers are the main force of consumption, coupled with the arrival of new energy vehicles, those 4S stores that do not keep pace with the times can only be abandoned by the market in the end.

Therefore, many 4S stores are not defeated by the market, but by themselves who are backward in their thinking and do not keep pace with the times.

In 2023, due to the hot sales of new energy vehicles, many sales consultants of BBA's traditional luxury brands have jumped to sell cars under new power brands and successfully transformed. At the end of last year, the topic of "flight attendants switching careers to sell new energy vehicles" also rushed to the hot search.

"New Product Strategy Finance" believes that there will be more 4S stores in the future, but 4S stores will not disappear completely, whether it is dealers, or 4S stores, as well as industry practitioners, should think about how to transform and upgrade and progress.