"Get the authorization of a luxury brand, open a store for a year and return to the capital, and then lie down and make money every year."
- Once upon a time, in that era of dreams, selling cars to make money was the consensus that made gold diggers rich earlier than selling houses.
Just like a lifetime, now dealers can't afford to lose, and they can't retreat, and they are almost on the verge of collapse.
"It's so hard to sell cars now! Dealers talk about making money, as long as they can hold on. "A branch of Xianglong Borui, the largest automobile service group in Beijing, said to the automobile grand view." Traditional brands, especially joint venture cars, have declined too much, and the price war has been fought too hard, and if there is no new energy brand that is easy to sell, it will not be able to survive at all. ”
A branch office is not an exception, and China's largest distributors are also in such a dangerous situation.
About a year ago, Pangda Group, which has the title of "King of 4S Stores", was delisted and announced that the company's shares would be terminated. Just a year later, Guanghui Automobile, the former largest auto dealer group in China, issued a suggestive announcement on the evening of June 20 that the company's shares closed at 0.98 yuan per share that day, below 1 yuan for the first time. As of the close of trading on July 5, Guanghui Automobile's share price stayed at 0.96 yuan, still not exceeding 1 yuan.
This year, the fall of Zhongtong Holdings and the running away of the boss of Guangdong Yongao are not only known in the dealer circle, but also cause a lot of movement in the society.
Those lucrative years have really passed, and the current scene is even more cruel. The crazy involution and endless price war in the auto market are like relentless artillery fire, and the dealers at the forefront of the market have already "bled into a river".
The lucky ones in the past, the cannon fodder today
Zweig said in "The Beheaded Queen": "She was too young to know all the gifts of fate, and she had already secretly marked the price." ”
The experience of China's car dealers is like the favor and ridicule of fate.
Let's start with a set of data about dealers.
According to incomplete statistics, from 2020 to 2022, more than 5,500 4S stores in China's auto market have closed down. Among them, there are many automobile dealer groups in Zhejiang, Sichuan and other places.
In 2023, about 2,000 more 4S stores across the country will be withdrawn from the network. It was also in this year that Pangda Group was completely delisted, and Zhejiang Zhongtong Holding Group fell, leaving a pile of bad debts.
From January to June 2024, in just half a year, nearly 2,000 4S stores have withdrawn from the network and closed down across the country. Among them, there is Guangdong Yongao Group, which was empty overnight and all 80 4S stores were closed.
On top of that, dealers are suffering from very exaggerated selling cars at a loss and high inventories, which is also shocking.
200,000 Mercedes-Benz C-Class, BMW 3 Series, Audi A4L, 140,000 Magotan 140,000, 120,000 Camry, Asian Dragon, Passat, 100,000 Accord, 60,000 Sylphy...... Such a price would have been unimaginable to anyone 5 years ago.
But now, under the price war, luxury cars in the terminal market are sold at "cabbage prices", and fuel vehicles are being sold, which is staging a realistic magic drama in China's auto market.
Not only traditional joint venture fuel vehicle brands, but also many independent brands and new energy vehicles are also competing for market share as much as possible at lower prices.
Dealers who are deeply bound to car companies, in addition to bearing the meager profits of single cars brought about by the price war, or even sell cars at a loss; It is also necessary to give full play to the role of the "reservoir" of car companies and accept the pressure of the brand side one round after another.
According to the "China Auto Dealer Inventory Warning Index Survey" released by the China Automobile Dealers Association, in June 2024, the dealer inventory warning index has reached 62.3%, up 8.3 percentage points year-on-year and 4.1 percentage points month-on-month.
Dealer inventory is under pressure, and car sales are sluggish. In fact, everything has come to follow, and the foreshadowing has already been laid.
Before 2018, with the continuous 28-year sales growth of China's auto market, more than 1,600 auto dealer groups and nearly 30,000 4S stores were born in the country.
It was the most glorious years for dealers and car companies, especially if they had the authorization of mainstream joint venture brands and luxury brands, it was like getting a money printing machine.
However, with the decline of the auto market in 2018, some joint venture brands such as Hyundai, Kia, Chevrolet, Peugeot, Citroen, Ford, etc. began to lose the market, and the dealers of these brands ushered in the first cold wind.
The bitter winter began in 2020 after the outbreak of the epidemic. At this time, the new energy vehicle "catfish" Tesla's factory in Shanghai has been put into production and sales, and the stimulated independent brands have begun to race against time to transform into electrification, and China's new energy vehicle industry chain has also been rapidly improved unconsciously.
However, it was also during this period that the joint venture brand was not plagued by the shortage of raw material supply, resulting in insufficient vehicle production; It is that Japanese, Korean and other brands have been in the temptation and hesitation of electrification transformation, and have stopped moving.
After the epidemic is over, in 2023, Tesla will take the lead in setting off a price war, and BYD will follow up with "the same price of oil and electricity", and the minds of users in the Chinese market at this time will be quickly occupied by new energy vehicles and independent brands. Traditional joint venture brands were caught off guard and responded in a hurry.
This is a major blow suffered by traditional fuel vehicles and joint venture brands dominated by fuel vehicles after decades of galloping in the Chinese market. Once the rout begins, it's hard to predict when it will stop.
Entering 2024, BYD will once again suppress joint venture brands and other friends with "electricity is lower than oil". The entire Chinese auto market has entered a life-and-death price scuffle.
Dealers are the "reservoir" of car companies and the "first line" of the market. When the market is good, "the water is big and the fish is big". When the market is bad, it is now, when the water is the first to break the dike, and the dealers are the first to make sacrifices.
Survive and lose less
According to industry data, in the first half of 2024, only two car companies, including joint ventures, independent, and new forces, have completed half of their annual sales targets: Chery and Geely.
Such an outcome seems to indicate that the second half of the year will be a bloodier price war, and dealers will face heavier pressure. Once this happens, I don't know how many 4S stores will hang by a thread.
The two of dealers can no longer bear the burden, one is the escalating price war, the difference between the purchase price of the dealer's new car and the terminal price is getting bigger and bigger, and the phenomenon of price inversion has become more and more outrageous.
When the market is good, dealers buy cars at the original price according to the OEM's guide price, and then sell them to end consumers at the original price (popular models will increase the price) to complete the sales target set by the car company, and then get the rebate issued by the car company at the end of the year.
When the market starts badly, dealers buy cars at the original price, and the terminal sells them to consumers at an appropriate price, as long as the sales target is completed, you can still get rebates at the end of the year to achieve profitability.
Coupled with the after-sales and used car business, the dealer's life can still go on.
Now, the original price of more than 400,000 cars, the terminal can only sell more than 200,000; For more than 200,000 cars, the terminal can only sell more than 100,000; More than 100,000 cars are sold at the terminal.
The end result is that the more cars sell, the more dealers lose. Even then, sales targets may not be met; Even if it is completed, the rebate you get may not be equal to the loss of selling the car.
According to the 2023 National Automobile Dealer Survival Survey Report released by the China Automobile Dealers Association, only 27.3% of dealers will complete the annual sales target in 2023, and the loss ratio of dealers will reach 43.5%, with nearly half of dealers losing money.
To add insult to injury, the sharp drop in new car prices has also seriously dragged down the second-hand car business, and the after-sales market share of 4S stores has also continued to decline.
Another burden that dealers cannot bear is the financial pressure caused by the pressure on the warehouse. The business model of dealers needs the blessing of high leverage, which is undoubtedly "licking blood from the knife edge" today, and once the capital chain is broken, it will be a catastrophe.
"The batch of cars you just entered, half of them have not been sold, and the task of the next batch of cars has come down again, do you enter or not? in, continue to take out loans, like a snowball. If you don't enter, what will you do with your initial investment? Squander? Do you want rebates? ”
The voice of the car seller was full of helplessness and sadness. In order to survive, in order to lose a little less, dealers also struggled.
In November last year, FAW Toyota issued a letter to dealers announcing that it would cut production in the coming months. At the same time, a proposal circulated on the Internet for dealers to unite to protest against FAW Toyota's car stacking. The outside world speculated that it was the resistance of the dealers that made FAW Toyota decide to reduce production and reduce the pressure on the warehouse.
In May this year, Porsche's Chinese dealers also issued a collective protest and boycott against car companies for their pressure and selling cars at a loss, "forcing the palace" German headquarters to subsidize the loss of new car sales and demand the replacement of relevant management.
The difficult situation of dealers and the resistance also seem to "shock" some car companies to varying degrees. Mercedes-Benz, BMW, and Audi have respectively carried out subsidies, reductions and price discounts for their respective dealer 4S stores.
Behind these games, the real reason for car companies to make concessions may be more because they can't afford the channel shocks caused by the withdrawal and closure of 4S stores.
However, in the long run, it is difficult for car companies and dealers, who were once deeply bound to each other to form a community of interests, to ensure that they will continue to maintain an unbreakable offensive and defensive alliance in the face of a more dangerous and unpredictable future.
What to do in the future
When the times turn the page, it is always difficult for the old things to make a stable transition to the new era. The battle for the survival of dealers continues, and there will be more challenges in the future, what about the future?
"We are expanding the Hongmeng Zhixing store, and this store will be doubled in size", the staff of Xianglong Borui Branch stood in front of the Xiaomi car store, pointing to the Hongmeng Zhixing store opposite.
Further in the direction of his finger, "We're building an ideal auto store there," he said.
And the location of the Xiaomi car store at his feet was the 4S store of the French brand DS a few years ago.
"Next to this", he pointed to the east of the Xiaomi car store, "the Ledao brand store of NIO is being built".
"We must quickly cut into more excellent new energy brands, otherwise traditional dealers have no way out", he said, "the entire Chinese automotive industry is transforming to new energy, independent brands have more and more market share, dealers do not quickly follow the transformation is only a dead end, there is hope for the transformation."
This hope is also being echoed by car companies. When the needs of new forces and independent high-end new energy brands to quickly enter the market through the direct sales model are realized, the disadvantages of high investment and operating costs of the direct sales model have gradually become prominent.
Especially with the continuous increase in the penetration rate of new energy vehicles, the sales of new energy vehicles continue to sink to more third- and fourth-tier cities, and when the price war is still not in sight, the financial pressure brought by the construction of directly operated stores will undoubtedly do more harm than good.
Therefore, in the past two years, many new forces and new energy brands have begun to walk on two legs of "direct sales + agency", including Xiaopeng, Leap, Zeekr, AVATAR, Denza, Equation Leopard, Ledao, Ideal and other brands.
In September last year, Xpeng launched the "Jupiter Plan" to phase out inefficient directly operated stores and expand the scale of stores for agents and dealers.
ZEEKR has also launched a dealer recruitment program to increase the proportion of authorized dealer stores.
NIO has planned to transfer the after-sales service and delivery center of the sub-brand "Ledao" to the dealer group.
DENZA and Equation Leopard have announced that they will recruit dealers from the whole society, and will adopt the channel model of "direct sales + dealer partners" in the future.
Even the ideal will also enter a large dealer group like Xianglong Borui. It is said that for BBA dealers who have withdrawn from the network, Ideal is taking the initiative to dock.
However, it is not easy for traditional dealers to catch the olive branch thrown by excellent new energy brands and transform smoothly. On the one hand, the location of the agent store, the customer flow and the consumption level of the surrounding people are also important conditions for brand selection.
Taking Xianglong Borui No. 1 Branch as an example, it can quickly access the new energy brands such as Hongmeng Zhixing, Xiaomi, Ideal and Ledao, which are closely related to the strong strength of its state-owned enterprise background, the surrounding high-consumer groups with housing prices of 70,000-140,000 yuan, and the excellent location outside the North Fourth Ring Road.
Not all dealers can have such good resources and conditions, and not all dealers can survive the darkest moment of the price war and usher in the dawn of dawn.
But we still have to believe in hope, and in any case, hope will favor those who are trying to make a difference.
Dealers can also continue to give full play to their original advantages and find as much profit growth space as possible in derivative business areas such as after-sales service, second-hand cars, insurance, and value-added services (beauty, modification, and accessories sales).
I hope there will be more dealers who can survive this fierce battle.