Car Dealers in China Turn to Transformation to Survive

Gasgoo.com (Shanghai Feb16th)– According to the latest survey conducted by China Automobile Dealers Association, there are more Chinese dealers which were not satisfied with their business performance and made less profits in 2015, compared against the year of 2014. Supporting this point, there are only 21.8% profitable dealers last year while 48.5% of them only made ends met and 29.7% even lost money. Under this harsh circumstance, dealers must turn to transformation to survive.

It’s widely believed in the auto industry that the dealer’s deficit was largely affected by their increasing operational costs, bad investment decisions and insufficient after sales service.

Lang Xuehong, Vice Secretary General of China Automobile Dealers Association, suggested that to achieve the transformation, dealers should further develop their used car business, actively explore more revenue streams such as car lease and parallel import, and test water in the E-commerce business.

As of now, nearly 40 Chinese auto dealers nationwide had inked their names in a strategic cooperation agreement and according to which, dealers will further develop their e-commerce business based on a platform called Autostreets.Besides, the expanding business of used car and leased car will also help dealers to make profit.

Auto industry believed the year of 2016 will be even harder for the dealers to make profits, affected by Chinese government’s request to disclose car’s repair and maintenance information and the expanding of e-dealers. But there are still 28.8% dealers believed that they will make profit in 2016 while only 20% thought they are going to lose money.

To be noted, merge and acquisition will also play an important role in the dealer groups’ expansion. The industry expected that the merge and acquisition on group level will happen very often in 2016 and become a new normal.