Car prices increase or affect profitability

Last week, Shengbo Research released a report saying that the total number of automobile dealers in the Chinese market has continued to grow and it has exceeded 20,000 by the end of last year. With the rapid expansion of vehicle dealership networks, competition is likely to intensify, thus reducing dealer profits.

Profit or affected

In the report, Shengbo Company pointed out that overseas car companies have expanded their distribution network in the central and western regions of China and gradually penetrated into small and medium-sized cities that were originally controlled by Chinese independent brands. On the other hand, self-owned brands are gradually focusing on attracting high-income buyers through the launch of higher-quality products.

For example, General Motors and Toyota Motor originally focused on high-income areas such as the eastern coast of China, South China, and North China, and currently begin to expand into markets with the lowest income.

The author, headed by Sheng Bo’s analyst Max Warburton, pointed out: “There is an inevitable contraction in profits.” As competition intensifies, smaller distributors may suffer severe shocks. Warburton said: "For some of the weaker brands, the current sales volume of their dealers has been relatively low, which (the expansion of the competition leads to competition upgrade) may be a disastrous trend."

The total number exceeds 20,000

According to the report released by Shengbo, by December 2012, China had a total of 21,000 auto dealerships, making it the world's largest auto dealership network. By contrast, the United States has 17,500 and Germany has 12,900. As a reference, data released by Urban Science Corporation in March this year showed that by December 31, 2012, China had a total of 21,139 auto franchise stores. In 2011, the top 25 distribution group sales accounted for 14% of the entire market. Share.

In the report, Shengbo said that Geely and BYD have the largest distribution network among car companies, with 975 dealerships and 730 dealerships respectively, which surpassed any of the two joint ventures of Volkswagen in China, or that Hyundai Motors is Number of dealerships in China.

Compared with self-owned brand dealerships and joint venture dealerships, the annual sales of single stores are significantly lower. For example, each dealership at Chery sells 642 vehicles a year, which is far below the average of 901 in the industry.