Global Times - According to a recent report from the China Automobile Dealers Association, half of all imported car dealers and 40 percent of domestic car dealers had suffered a loss in 2012.
Unlike in most mature auto markets, automobile dealers in China profit almost exclusively from car sales. In many developed countries however, car dealers earn a substantial amount of their profits through auto financing and after-sales services. Thus, even when sales decline, these dealers can still stay afloat. Yet, faced with fewer profit channels, Chinese auto dealers have no way to protect themselves against weakness in the downstream market.
Chinese car dealers could also benefit from placing more emphasis on the second-hand market, which is poised to grow sharply in the years ahead as local drivers loss their fixation with new vehicles. In fact, second-hand auto trading volume in the country stacked up to 2,312,900 units in the first half of 2012, up 18.48 percent year-on-year.
