The operating difficulties of 4S stores have intensified
Entering 2024, China's auto market continues to be sluggish, and the operation of 4S stores is becoming increasingly difficult. Many 4S stores reported that the price of the car was reduced, but the sales volume did not increase. They are stuck in the dilemma of "sell one and lose one, and the more you sell, the more you lose".
According to the data, the retail sales of passenger cars fell sharply in the first half of this year, showing weak market demand. In this environment, some brand 4S stores have closed, indicating that car dealers are encountering unprecedented difficulties.
Multiple pressures lead to a dilemma for dealers
In interviews, many veteran 4S stores said that they had never encountered such a grim situation. The decline in sales has shrunk the profits of 4S stores, the inventory pressure continues to increase, and cash flow is difficult. At the same time, multiple pressures from upstream and downstream have forced 4S stores to a dead end.
The assessment tasks of upstream manufacturers have not been reduced, forcing 4S stores to repurchase inventory at high prices. Downstream consumers are undergoing structural changes, and the competitiveness of traditional car companies is declining. In the face of the impact of new car companies, the operation of 4S stores is facing great pressure.
The auto market has entered a phase of reshuffle
Experts pointed out that the current Chinese auto market is oversold and there is overcapacity. In this environment, the competition between brands is extremely fierce, and it has entered the reshuffle stage of survival competition.
While there is still potential growth in total sales, brands need to compete for a limited share through elimination. In this process, weaker 4S stores and brands will face the pressure of being eliminated. This has also led to a vicious competition situation between 4S stores.
Dealers face a cliff-like recession
Data shows that thousands of 4S stores in mainland China have been closed. Considering the acceleration of the electrification transition, both traditional fuel vehicles and their dealers are facing a withering situation. Even luxury car brands are hard to avoid its effects.
At present, the competition between 4S stores has become fierce, but the income is declining sharply. Industry experts warn that if the situation continues to deteriorate, there could be a large-scale closure of 4S stores by the end of the year. This will lead to employment and social problems.
Industry insiders suggest that 4S stores should adjust their mentality and correct their positioning. In the change of market demand structure, dealers should also take the initiative to transform. Adjust business strategies to reduce costs and control risks. Actively expand the service business, such as strengthening after-sales, but also close the loss-making stores in a timely manner.
In addition, choosing a strong NEV brand may be the key to improving the survival rate. In the face of the tide of reshuffle, 4S stores must accelerate their transformation to adapt to the market in order to get out of the predicament.
At present, China's auto dealership industry is in an unprecedented predicament, and many 4S stores that do not have core competitiveness will be eliminated. But this will also promote the entire industry to achieve survival of the fittest, improve quality and efficiency. In the long run, after this reshuffle, China's automobile circulation industry will enter a new stage of development. Maintaining strategic focus and actively responding is the key to 4S stores to tide over difficulties.
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