More than 40% of auto dealers lost money, and the 4S shop transformation repair shop could not survive for 3 years.

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According to the survey report on the living conditions of national automobile dealers in 2023 released by china automobile dealers association, more than 70% of dealers failed to complete the annual task index; The loss ratio accounts for 43.5%, and the profit ratio is only 37.6%.

Will car dealers and 4S shops still be a good business in 2024?

Let’s take a look at several sets of key data. (The following data source: china automobile dealers association)

According to the survey, 27.3% of the vehicle sales targets are achieved at or above 100%, and 19.4% are between 90% and 100%, which make up 46.7%. Usually, the completion rate is above 90%, and the OEM can get 100% rebate.

This means that in 2023, more than half of dealers failed to get the "planned" rebate at the beginning of the year.

Judging from the proportion of income of each business module in the total income, the proportion of new cars and after-sales has not changed much, only the proportion of financial insurance has been rising all the way, and the proportion of used cars has been declining all the way.

The profitability of dealers is also not optimistic. In 2023, the loss ratio reached 43.5%, and the profit ratio was 37.6%. Although the profitability improved compared with that in 2022, it was significantly lower than that in 2021, which was the second worst result in the past six years.

Finally, look at the composition of dealers’ profits. The vehicle sales contributed -15.6% and the after-sales contributed 60.7%. Obviously, the new car does not make money, and the after-sales volume is small, which is the dilemma faced by dealers.

Combining these tables, we can roughly see what kind of year the dealers experienced in 2023.

First of all, dealers are trapped in the traditional business model.None of the business sectors can make people shine at the moment, leading a certain sector to rise suddenly.

Vehicle sales always account for about 80% of operating income, which confirms an experience in the industry: vehicle sales determine whether dealers are dead or alive.

Yes, after-sales can’t determine the life and death of dealers. Even those dealers whose service absorption rate is more than 100% will actually live for less than three years after being cancelled and turned into ordinary repair shops.

Because on the one hand, there is no source of supplementary customers, and the loss of customers and the reduction of admission are inevitable results; On the other hand, the expenses such as rent, water and electricity personnel’s wages have not decreased, and the profits will only become thinner and thinner; The most important thing is to lose the gold-lettered signboard authorized by the manufacturer, and the degree of trust is no longer the same.

Secondly, new car sales not only don’t make money,It is also necessary to dig out a piece from the profits of other business sectors to fill the "negative profits".

Combined with the achievement rate of vehicle sales target, the dealers who can make profits or survive in 2023 are all the stores that rank higher in the national sales ranking of brands or top in the regional sales, with high achievement rate. They can not only get millions of full rebates, but also get hundreds of thousands of extra rewards such as "market contribution award" and "market development award".

From the OEM’s point of view, if all the head dealers in the brand fall down, the brand will have no one to follow. In order to prove the "correctness" of its marketing strategy, it is necessary to set a good example, even if we put some water on these dealers at a critical moment.

From the dealer’s point of view, only those senior dealers whose service absorption rate is greater than 100% can have the confidence to reduce the profit of the new car sales section in the store to negative, so as to follow up the annual volume price in 2023 and sell cars at a loss. The gambling is that the main engine factory does not dare to let itself go bankrupt.

Especially for those dealers whose land is owned rather than leased, the operating expenses are missing a large piece of land or store rent, and only the personnel expenses and marketing expenses are left in the big expenses.

Even if the profits of previous years are filled in, the speed of losing blood can be greatly alleviated, and they can stay at the poker table for a longer time, and the greater the grasp of procrastination.

So in 2024, is automobile distribution still a business project worth sticking to?

Needless to say, the enterprises or 4S shops that still have the status of car dealers are all authorized to sell fuel car brands (except Tucki).

Whether these dealers are still worth sticking to in this industry depends on the power technology route they will adopt in the future and their geographical location.

With regard to the future development direction of automobile power technology route, pure electric vehicles will become more and more mainstream, but it will not be realized in a short time, and its market penetration may even fluctuate upward, let alone completely replace fuel vehicles.

Even if the hybrid vehicle is a transitional technology, this transitional period will last at least 10 years, or even more than 20 years.

Fuel trucks or liquid fuel trucks will not disappear completely. Even in the southern provinces and cities of China, there will still be sporadic use in emergency rescue and disaster relief, field work, etc., while the scope and time of use in the north will be wider and longer.

The power technology route of automobile brand OEM is a long-term strategic decision that will not be easily changed. As its distributor, it is relatively easy to obtain accurate information.

Then the remaining major influencing factor is the geographical location of the dealer.

If the dealer is located in the north of Qinhuai line, even if the power technology route of the brand main engine factory is only fuel oil and electricity, the risk of sticking to it is still relatively low; If the power technology route of the brand OEM is only pure electricity, then the risk of sticking to it is relatively high.

On the other hand, if the dealer is located in the south of the Yangtze River, the risk of sticking to technology brands with only fuel and oil is relatively high, even if the risk of sticking to technology brands with only pure electricity is still relatively low.

So, in 2024, is automobile distribution still a business project worth investing in?

This problem is more complicated than the previous one, which involves not only the power technology route that the brand OEM will adopt in the future and the geographical location of the proposed store, but also the business policy of the brand OEM.

Because the brand OEM sells well and makes money or not, it doesn’t mean that the dealer sells well and makes money or not.

At present, most of the "new power" new energy brand OEMs adopt a mixed cooperation mode, that is, the electromechanical service sector of new car sales and after-sales is self-operated, and only the after-sales car body panel is recruited.

Typical brand OEMs, such as Tesla (since last year, it has started to operate its own business), Weilai, Ideality, etc., are not discussed here.

Most of the new energy brands established by the original fuel vehicle brand OEM still choose the 4S store model, such as:, Lantu, Feifan, Zhiji, Aouita, etc., but when choosing these brands to apply, we must pay attention to their respective business policies.

In business policies, special attention should be paid to the following terms:

Address of the proposed store:Generally, it is required to be in the automobile business circle or downtown area, which is related to the rental cost in future operations.

Building area and building form:It is related to the capital investment of hardware construction and the cost of hydropower publicity in operation.

Sales commission:New energy brands basically adopt the sales agency system, that is, dealers are no longer required to control the inventory, but dealers also lose their influence on the terminal retail price of automobiles. Every time a commercial car is sold (signed), they can only get a sales service fee of 2%-3% of the sales price of new cars from the brand OEM, that is, a sales commission.

This profit is basically less than half of the difference between the purchase and sale of dealers 10 years ago, but for the current market environment, it is a long-lost new car sales profit. However, it is unclear how the proportion of this sales service fee will change in the future.

Payment method of store building rebate:Brand OEMs usually give rebates to newly-built stores, but the current rebate method is disgusting. For example, the total amount of the promised rebate for building stores is 2 million, but it needs to be paid in three years (every 12 months is one year from the month after acceptance and opening), with a maximum of 700,000 yuan per year, which is paid as a subsidy to 1000 yuan for each new car sold.

That is to say, in the past three years, at least 700 vehicles must be sold every year, in theory, in order to get the store-building rebate in full. After the new store opened for three years, the sales volume usually increased gradually. If 500 units, 800 units and 1,000 units were sold in these three years, the store-building rebate would be 50+70+70 = 1.9 million. Of course, in order to reach the sales volume of 700 units in the first year, investors increased their investment in publicity or marketing activities to push up sales volume, and brand OEMs also encouraged and welcomed the success, because it was the investors’ money that was spent, and these promotional investments, brand OEMs said that even if it rains, it will never rain.

In short, there are many reward or rebate clauses in business policies that need to be carefully studied. If you want to get them in full or at the top, there is basically only theoretical feasibility, just for the operation of addition, subtraction, multiplication and division, which is quite insulting to IQ.

As for whether it is worth investing, it is necessary to judge the specific location, brand and investor’s own conditions one by one.

Article source: automobile service world, thank you.