Only 20% franchised dealers profit

There are more than 10,000 franchised dealers in China by Oct of 2006, according to the statistics of Auto Franchiser Chamber of Commerce under All-China Federation of Industry and Commerce. The first Honda franchised dealers was opened in Guangzhou in 1998. More than 10,000 dealers were established within 8 years, which means 104 dealers opened monthly. 

FAW Toyota had 266 franchiser shops by last Oct. Chang'an Ford increased to 162 dealers from 111 dealers in 2005. Up to now the trend of expanding is not ending. Guangzhou Honda planned to present 350 franchised dealers by 2007. Dongfeng Nissan will have 310 dealers by the end of 2007 while there were 250 dealers by 2006. Brilliance BMW also planned to increase to 72 dealers.

Suhui, the general manager of Beijing Asian games village auto market said: "Approximately 2900 franchiser shops were registered but only 1400 dealers are running the business. Some are newly registered and some are decorating shops and it's certain that some had already closed." Mr. Su thought present sales shops market are outnumbered and saturated. For a low-grade vehicle franchiser, at least 1,500 units annually can promise its survival, 1,000 units for medium-grade vehicle franchiser and 500-600 units for a high-grade vehicle franchiser.

"Presently 40% franchisers are running in loss, 40% are in balance and only 20% win." Tianwei, the manager of market department of Beijing Beifang Weiye Company said," the competition of same brand is very terrible. If one dealer cut the price for yearly bonus, others would follow it so that the profit would be squeezed out.