China Automobile Dealers Association: Survey on the Survival Status of National Automobile Dealers in the First Half of 2022

In terms of brand type, luxury / imported brands scored the highest at 79.7 points, joint venture brands scored 72.1 points, and domestic brands scored 79.0 points.

The survey results show that dealers are less satisfied with manufacturers bundling unsaleable models, market order, and inventory management, while the satisfaction score for manufacturer personnel and regional staff is over 80 points. In the first half of 2022 , due to the repeated epidemic, stores were closed, customer flow decreased, and store funds were under great pressure.

02. Only 18.1% of dealers achieved their semi-annual sales targets

Affected by the chip shortage and the repeated outbreaks of the epidemic, only 45.1% of dealers have completed more than 80% of their half-year task targets. The survey shows that dealers who have completed their half-year sales targets account for 18.1% , among which luxury / imported brand dealers have achieved better target completion, with 24.6% of dealers completing their half-year sales targets.

At the same time, dealers' new car gross profit margin improved slightly, up 0.2 percentage points to 1.5% from 2021. After-sales gross profit margin also increased significantly, up 4.4 percentage points from 2021 to 40.3% , the same as 2020 .

03. Dealers’ profit margins narrow

Unstable factors such as epidemic risks, chip shortages, consumer pressure, and talent loss have seriously affected dealers' profitability in the first half of the year. In the first half of 2022 , dealers made a profit of 27.3% and lost 19.1% , and most dealers' profits remained basically the same.

The overall profitability of luxury/imported brands is good, with more than 50% of dealers making profits. The proportion of profitable dealers of joint venture brands and domestic brands is less than 15%.

In the dealer profit structure, the proportion of new car sales and after-sales profits has increased. Factors such as repeated epidemics and economic downturns have affected the consumer market, and the profitability of the entire industry is not good, especially the proportion of financial insurance profits has declined significantly, down to 15.3% from 2021. Especially after the 919 insurance premium reform, the insurance commission income of dealers has dropped significantly, and coupled with the tightening of insurance companies' policies, the profitability of the insurance business has declined.

04. Main difficulties and challenges faced by dealers

Throughout 2021 , multiple factors, such as the repeated outbreaks of the epidemic causing dealers to suspend operations and the chip shortage leading to untimely vehicle supply, disrupted the sales rhythm and increased the difficulty for dealers to cope with market changes. At the same time, high financial pressure, high customer acquisition costs, and reduced customer flow are the core pain points for dealers.

Dealers reported in the survey that factors such as reduced supply, declining customer traffic and increased customer acquisition costs are all affecting the conversion of potential customers.

In the survey, dealers mentioned that they hope that manufacturers can appropriately adjust business policies, reduce store assessments, increase brand and product publicity, and help dealers stabilize operations. In particular, in the face of many uncertainties in the auto market in recent years, they hope that subsidy policies will continue, or that favorable measures such as providing auto consumption coupons will be taken to help dealers improve their profitability.

05. Dealers are more cautious about the performance of the automobile market in 2022

At present, the automobile industry is facing difficult challenges, and the government, associations and enterprises are working hard to promote the market recovery. In June this year , many consumer policies such as national tax cuts, local government subsidies, manufacturer subsidies, and dealer promotions were implemented, which had a strong pulling effect on the demand consumption side and accelerated the recovery of the automobile market.

Regarding the market performance in the second half of the year, 31.6% of dealers remain pessimistic and believe that market sales will continue to decline. For the whole year, 21.4% of dealers believe that there will be a downward trend throughout the year, while 30.3% of dealers believe that both the second half of the year and the whole year will remain the same .

A survey on dealers' investment intentions shows that dealers are cautious about future investments and acquisitions. The brands they intend to invest in or acquire are mainly concentrated in some luxury brands, Toyota and Honda brands, while for domestic brands, investment intentions are mainly concentrated in new energy brands.

In 2022 , the China Automobile Dealers Association will continue to maintain communication with the government and manufacturers, provide feedback on the status of the automobile distribution industry, strive to resolve the demands of member companies, and promote the healthy development of the industry.

Appendix: Survey on the Survival Status of Automobile Dealers Nationwide

As an industry organization, the China Automobile Dealers Association has successfully compiled and released a number of indexes, industry survey reports and other work in the new and used car fields of the automobile distribution industry, which have been unanimously praised by automobile manufacturers, parts manufacturers, dealer groups, banks, securities, consulting companies and other automobile-related companies.

The China Automobile Dealers Association has conducted a survival survey on automobile dealers for the 13th consecutive year from the perspective of serving the industry, serving dealers, and serving manufacturers in order to promptly understand the pressures and difficulties faced by automobile dealers and promote the healthy and sustainable development of the industry.

The main contents of the survival status survey include: enterprise scale, annual target completion, operating income, vehicle sales and other indicators, to understand the business situation of the enterprise. At the same time, according to the continuous changes and development of the market, to understand the suggestions and opinions of dealers on the government, manufacturers and associations; to understand the impact of new business models on dealers and the market.

Through the dealer survival status survey, we can understand dealers' satisfaction with manufacturers' policies and management, convey dealers' voices to manufacturers, and reflect dealers' demands; manufacturers can discover problems and shortcomings in dealer management through industry comparison, and provide reference for manufacturers to improve and formulate management support policies; promote the healthy and sustainable development of the automobile distribution industry, and truly reflect the survival status of dealers.