From a market value of hundreds of billions to the brink of delisting, Guanghui Auto, which has been struggling to transform, has put an end to the 4S store era

Friends who like to watch domestic basketball leagues should be familiar with the name Guanghui. But in the automotive industry, it has a series of other identities: China's No. 1 passenger car dealer, China's largest car rental provider, and China's largest used car trading agent.

Guanghui's official website shows that it sells 66 car brands, covering almost all mainstream brands on the market. In other words, the car you buy is likely sold to you by Guanghui.

But now, this behemoth is facing a life-and-death moment of stalling.

On July 17, Guanghui Auto opened at the limit down, and its share price has been below 1 yuan for 20 consecutive trading days, which is about to trigger the delisting clause. In order to maintain its listing qualification, Guanghui has taken multiple measures, but what is coming has come.

Guanghui Auto has nearly 700 4S stores and its market value once exceeded 100 billion yuan, making it stronger than most automakers. However, after hitting the daily limit on July 17, its market value has been less than 6.5 billion yuan.

The financial report shows that Guanghui Auto suffered a net loss of 583 million to 699 million yuan in the first half of this year. Such a high loss does not seem to match the current sales growth of the domestic auto industry.

Data from the China Passenger Car Association shows that from January to June this year, the cumulative sales of domestic passenger cars reached 9.839 million units, a year-on-year increase of 3.2%. According to this trend, there will be no problem in achieving 20 million units for the whole year.

The overall market looks good, and Guanghui, which focuses on the auto sales market, should also be able to enjoy the good things. But the actual situation is far from that. Since 2018, its stock price has been declining, and now it is on the verge of delisting.

Where did the problem go wrong that caused Guanghui, the largest automobile dealer group in the country, to become emaciated in an upwardly developing market?

2018 is a critical time node.

In that year, the cumulative sales of passenger cars in China reached 22.35 million, a year-on-year decline of 5.8%. This was the first annual decline in China's auto sales since 1990. It was also from the second half of that year that dealers began to clearly feel that "cars were not selling well."

The stock price of Guanghui Auto began to enter a downward channel from this year.

The industry is declining, and dealers are suffering. If Guanghui Auto had taken the initiative to change and embrace new energy at that time, it might not have come to this. The key to the problem is that it still regards fuel vehicles as the standard.

Since the second half of 2018, China's auto market has bid farewell to rapid growth, with annual sales stabilizing at around 20 million vehicles. Last year, it climbed to 26.063 million vehicles, mainly due to the rise of new energy vehicles.

Starting from 2020, China's new energy vehicle market began to experience explosive growth. In 2020, China's new energy vehicle sales were only 1.36 million units, but in 2023 it soared to 9.495 million units, and in 2024 it is expected to reach 11.5 million units, with a penetration rate of more than 40%.

It was the sudden rise of new energy vehicles that reversed the downward trend of the entire automobile market. However, Guanghui fell behind at this time, or it could be said that it did not really think about how to embrace the new energy market and was hasty and lacked judgment in choosing partners.

As of the end of last year, the number of new energy stores put into operation by Guanghui accounted for only 3.5% of the total number of business outlets, and most of these brands were small-scale new power brands such as Wenjie, Xiaomi, Zeekr, and Lantu. The sales contributed by these outlets are completely unable to make up for the sales gap of traditional car brands.

Deep ties with traditional automobile brands, especially joint venture brands, used to be Guanghui’s core competitiveness, but now this advantage has become its weak link.

When the fire breaks out in the city gate, innocent people are affected. Traditional joint venture brands have difficulty in transformation and sales continue to decline. As a distributor, Guanghui will naturally be affected.

In fact, even if we review the situation now, we will find that there are not many opportunities for Guanghui Auto to transform. Previously, Guanghui mainly sold joint venture brand models, but now 80% of new energy models are contributed by independent brands, which makes its identity very embarrassing.

In terms of building dealer networks, the approach of leading new energy companies is different from that of traditional manufacturers. They tend to build their own marketing networks. For example, Tesla and most new car manufacturers adopt the direct-sale store model. In addition, traditional manufacturers such as BYD and Geely also have a large number of direct-sale stores.

Now it seems that Guanghui is not the only dealer group facing the same problem.

At the beginning of 2023, Zhejiang Zhongtong declared bankruptcy and all 19 of its 4S stores were closed; subsequently, the shares of another dealer giant, Pangda Group, were delisted; at the beginning of 2024, Guangdong Yongao encountered a major crisis; recently, Senfeng Group, the largest dealer group in Yancheng, Jiangsu, announced its bankruptcy and more than 60 4S stores of its 25 brands were closed.

Data from the China Association of Automobile Manufacturers shows that 70% of automobile dealers nationwide failed to achieve their sales targets in 2023, and only 37.6% achieved profitability.

Judging from the current situation, it is unlikely that traditional dealer groups like Guanghui Auto will be able to turn things around in the short term. The only chance is to "stay put" and wait for new energy manufacturers to actively change their sales model and penetrate from direct stores to distributors.

At present, many brands do adopt the direct sales model, but the 4S store model also has its role, such as advance payment and stockpiling. Because the direct store model is too costly, new forces are also seeking distributor cooperation to reduce costs. Previously, Tesla has repeatedly reported that it will switch to the 4S store model. Xiaopeng Motors quickly implemented the "Jupiter Plan" after Wang Fengying took office, issuing sales targets to major marketers to share the huge financial pressure.

Car dealerships are downstream services of the auto industry, parasitic on automakers, and their own subjective initiative is actually quite limited. From this perspective, where will they go in the future? Will they go to the depths of history or will they have a chance to make a comeback? We have no way to predict history, but stockholders seem to have given the answer with stock prices.

The boat has passed, but the mountains remain. 4S store, the road ahead is uncertain.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.