4S shop retreat survey： the turnover rate of some stores exceeded 40%, and the boss chose to change careers.

On June 30th, the huge auto trade group co., ltd, the "first stock of auto dealers", was officially delisted. From the giant with thousands of 4S stores in the past to the sudden delisting, the huge experience was embarrassing. In fact, in recent years, car dealers have had a hard time, with sales falling and profits plummeting. 4S stores have closed from time to time, and many investors have chosen to quit the network and "lie flat".

"In the first half of the year, I barely survived by factory subsidies, and it may get better in the second half of the year. I can only say that it is most important to survive." Referring to the living conditions of automobile 4S stores this year, Liu Wei (a pseudonym), the head of a luxury brand store, told The Paper that the era of "lying down to make money" in 4S stores has long since ended.

The fatigue of 4S stores is closely related to the overall trend of the automobile industry.

Liu Wei believes that, on the one hand, China’s automobile market is already a "strong buyer’s market", and with more and more transparent information and more rational consumers, it is not an easy task to sell cars. On the other hand, under the new energy wave, the transformation of sales channels has accelerated, which has supported the distribution model of 4S stores to be impacted by the direct sales model and aggravated the survival challenge of 4S stores.

The turnover rate of some stores exceeded 40%, and the boss chose to change careers.

Wu Hong (a pseudonym), who had run a joint venture car 4S shop for many years, chose to leave the automobile distribution industry in early 2023. Because the brand it represents has gone from bad to worse in the China market in recent years, and the profit of the whole industry is not as good as before, Wu Hong simply gave up joining other brands.

In Wu Hong’s view, the epidemic situation and other factors in the three years from 2020 to 2022 caused the 4S store to suffer "internal injuries". "In these three years, the gross profit continued to decline, while the sales expenses and customer acquisition costs continued to rise. Last year, my store left more than 40% of the staff."

Wu Hong added that he was not alone, and many investors who made a fortune from 4S were withdrawing. "As far as I know, most 4S stores basically didn’t make any money, so luxury brands will have a little better life, and mass brands won’t make much difference. It can be said that doing low-end is basically a large-scale loss. "

The research on the industry also confirms this situation.

A few days ago, Liu Yingzi, president of the Automobile Dealers Chamber of Commerce of the All-China Federation of Industry and Commerce, revealed at the China Automobile Distribution Industry Conference that at the end of 2022, the Chamber of Commerce had conducted an extensive survey on the operating conditions of dealers, and found that more than half of the dealers were losing money, and some even suffered serious losses. In the first half of this year, although the business situation of dealers has improved, there has been no fundamental change, and most dealers are still in a difficult situation.

On July 3rd, the latest issue of "China Automobile Dealer Inventory Early Warning Index Survey" released by china automobile dealers association showed that in June 2023, the inventory early warning index of China automobile dealers was 54.0%, up by 4.5 percentage points year-on-year, and the inventory early warning index was still above threshold, so the automobile circulation industry was in a recession zone. China automobile dealers association pointed out that the automobile market recovered moderately in June, but the operating conditions of dealers were still less than expected.

The price of the auto market is scuffled, and 4S stores are forced to "cut meat and feed customers"

People in the industry generally believe that the hardships of car dealers are directly related to upstream car companies.

Liu Wei said that the competition in the automobile industry is fierce, and the OEMs are getting less and less profitable. As the downstream of OEMs, dealers will undoubtedly be subjected to pressure transmission. The price of new cars is seriously lowered, and the gross profit of bare cars is extremely low. "The OEM can’t eat meat, and dealers don’t want to drink soup."

"Some OEMs’ setting of assessment indicators for 4S stores can be said to be provoking internal contradictions." Wu Hong believes that in recent years, some OEMs have set unreasonable sales targets for 4S stores in order to pass on the performance pressure, and it is quite common to force stocks, deduct rebates and bundle purchases.

Under the rigorous assessment, only 20% of dealers have completed the quota allocated by the OEM this year. According to a recent survey in china automobile dealers association, 21.3% of dealers were able to complete the sales task in the first half of the year, and 11.7% of dealers said that their task completion rate was even less than 50%.

"There are thousands of 4S stores that quit the network every year. The outstanding feature in the past two years in 2021 and 2022 is that the number of joint venture brands has increased significantly, which has become the mainstream. In fact, there were more domestic brands before." Wu Hong said.

Because of the strong bargaining power of luxury brands, the profit level has risen instead of falling. This year, the auto market is in a downturn, and the dealer channel welcomes the "blood transfusion" of the OEM.

According to media reports, at the beginning of this year, BMW began to grant subsidies to brand dealers, and in early June, BMW subsidized 4 billion yuan to dealers. After paying hundreds of millions of yuan in subsidies in the first quarter, Mercedes-Benz continued to distribute 2 billion yuan in subsidies to Mercedes-Benz dealers in June. Audi, on the other hand, gives a subsidy of 2% of the car price for every car sold by the dealer.

In contrast, the market share of joint venture brands has been declining in recent years, and the market share and profit rate have been declining, especially for the second-tier brand OEMs, which are hard to protect themselves, and they have no time to take care of the survival of dealers.

Liu Wei bluntly said that in this year’s price war, 4S stores, especially joint-venture brand stores, have obviously been forced by manufacturers to "cut meat to feed customers". In the past, they sold cars at a higher price, but now they are selling cars at a loss. "Manufacturers are all following the price reduction and inventory pressure, resulting in many 4S stores selling cars at a loss. You have to complete the factory task to get the year-end rebate. This is a big head, otherwise there is no chance of’ working for a year in vain’."

New energy vehicles reshape channels, but 60% of new energy vehicle dealers do not make money.

China automobile dealers association’s report shows that in 2020, there were 2,362 4S stores that withdrew from the Internet, nearly 1,400 in 2021 and 1,757 in 2022. Thousands of dealers quit the network, which is often regarded as a sign of the decline of 4S shop model.

Interestingly, however, Wu Hong introduced that in fact, the total number of automobile dealers in the country has been rising continuously in recent years. "If there is a good job, there will be a bad job, and the industry will always go in and out. It is not that you can draw a conclusion just by looking at a number."

Most of those who quit are fuel car dealers, while more new entrants are attracted by the new energy track.

At present, the biggest trend in the automobile consumption market is undoubtedly the explosive growth of new energy vehicles. In 2021 and 2022, the production and sales of new energy vehicles have doubled. The reshaping of the industry by new energy vehicles has become an unavoidable objective fact for all dealers.

According to the latest data released by the Federation, the retail sales volume of the new energy vehicle market in June was 665,000, up 25.2% year-on-year and 14.7% quarter-on-quarter. In June, the retail penetration rate of new energy vehicles in China reached 35.1%, which was 7.8 percentage points higher than the penetration rate of 27.3% in the same period last year.

The outbreak of new energy vehicles, on the one hand, accelerated the exit of joint venture brands, on the other hand, changed the profit model of automobile sales channels.

From the penetration rate of new energy vehicles, we can directly see the situation of joint venture brands. In June, the penetration rate of new energy vehicles in independent brands was 58.8%, that in luxury cars was 30.9%, and that in mainstream joint venture brands was only 3.7%.

Zhou Na (a pseudonym) used to be a salesperson of a mainstream joint venture brand 4S shop, and at the beginning of this year, she switched to an independent new energy automobile brand. She told reporters that in the past two years, practitioners like her who have switched from traditional 4S stores to new energy stores and new power stores abound. "No matter what stores need professional employees, most of these people are still diverted from old 4S stores."

Zhou Na introduced that in the sales section, influenced by Tesla, at present, new energy vehicle brands are basically at a unified national price, and sales are promoted simultaneously online and offline. The main business of stores is to serve customers well, and there is no need to "intrigue with customers" because of various additional fees; In the after-sales, the gross maintenance cost of new energy vehicles is estimated to be less than one-third of that of fuel vehicles of the same level, and there is no value-added service project that can be "hands-on" by 4S stores. After-sales is no longer the highlight of profit, and the traditional structure of 4S stores integrating sales, spare parts, after-sales and information feedback is no longer suitable for the sales rhythm of new energy vehicles.

However, she also bluntly said that although they all sell cars, the working mode is very different from the past, and the changes in assessment methods have also made it difficult for many people to adapt. "In the past, we could make deals through various price negotiations, but now we can only rely on services. For example, I gave the commission of this order to the customer, which prompted him to buy a car. After the manufacturer found out, the penalty for the store was more than several hundred thousand. "

Wu Hong did not choose new energy vehicles when a large number of practitioners flowed to the new track. "At present, 60% of the channel dealers of new energy are actually not making money," Wu Hong said. "The competition in the automobile industry is fierce, and the sales channels are also being reshuffled. The price system of both fuel vehicles and new energy vehicles needs to be rebuilt, and the cost of trial and error may be higher."