China Automobile Dealers Association: Dealers' used car business scale and profits grew rapidly in 2021

China Automobile Dealers Association: Dealers' used car business scale and profits grew rapidly in 2021

2021 is a difficult year for my country's automobile industry. The epidemic has not subsided, and the chip shortage and rising raw material prices are superimposed. It is not easy for automobile sales to grow against the trend. While automobile production and sales have regained growth, the automobile market in 2021 is also full of highlights. In order to timely and accurately understand the impact of the epidemic and chip shortages on the industry and the survival of dealers, the China Automobile Dealers Association launched the "2021 National Automobile Dealer Survival Status Survey" activity.

According to the survey, more than half of the dealers achieved profitability in 2021, and the proportion of profitable dealers increased. Among them, the contribution of used car business to dealers' profitability has gradually increased, and the growth rate of used car gross profit margin is higher than that of new cars and after-sales. The used car business has taken advantage of the situation and developed rapidly.

According to the survival survey, more than 80% of dealers will engage in used car business in 2021, and the proportion of used car practitioners will also increase from 3% to 6%. At the same time, more and more dealers are conducting used car sales activities by setting up dedicated used car booths in or outside the showroom.

Among these dealers, the implementation of the tax reduction policy for used car distribution has prompted more and more used cars to be sold through the distribution model, which has also led to an increasing proportion of dealers with used car distribution qualifications.

Among the dealers surveyed, more than 80% said that used car sales in 2021 increased to varying degrees, and only a small number of dealers saw a decline in used car sales due to the impact of the epidemic, funding, operational and other issues.

According to industry data, my country's passenger car sales began to decline in 2018, and in 2020, due to the outbreak of the epidemic, passenger car sales fell sharply, with a sales drop of 6%. After 2021, after the joint efforts of manufacturers and dealers to overcome numerous difficulties, my country's auto sales reversed the downward trend and achieved positive growth, with passenger car sales increasing by 6.5%.

Although used car sales are not as high as new car sales, used car sales have been growing for many years except for a slight decline in 2020 due to the epidemic, and the growth rate is much higher than that of new cars. The growth rate of used car sales in 2021 was 22.7%, the highest in the past decade. Compared with new cars, used cars have a better development momentum.

In 2021, due to the shortage of chips, the supply of vehicles was insufficient, dealers' inventory decreased and the margin of profit was narrowed. In terms of profitability, according to the survival survey data, 53.8% of dealers achieved profitability in 2021, and dealers' profitability increased.

With the support of favorable policies, dealers' used car business has achieved rapid growth, and its contribution to dealers' profits has gradually increased.

From the perspective of dealer income structure, new car sales still accounted for the largest share of dealer income in 2021, but the proportion of new car sales is declining. Only after-sales and used cars have increased their share of income, among which the growth rate of used car income is higher than that of after-sales, increasing from 2.7% in 2020 to 5.5% in 2021.

Judging from the profit structure of dealers, the profit share of new cars has increased significantly due to factors such as chip shortages, which has led to "shortage of supply" for new cars. The profit share of used cars is not as high as that of new cars because they are still small in scale and have lower sales than new cars at this stage.

Although the profit share of used cars is lower than that of new cars, from the perspective of profitability, the growth rate of used car gross profit margin is the highest. In 2021, the gross profit margin of new cars increased by 0.2 percentage points, that of used cars increased by 3.4 percentage points, and that of after-sales service decreased by 4.4 percentage points. Overall, the contribution of used cars to dealers' profits is increasing. According to dealers' operating data, the increase in the proportion of retail used cars and certified used cars has made a great contribution to the growth of used car gross profit margin.

According to the survival survey, dealers' used car sources mainly come from replacement, accounting for more than 70%, far higher than the proportion of vehicles from other channels. This also shows that dealers' vehicle sources are not rich enough, and they need to actively expand vehicle channel sources to solve the problem of insufficient used car sources.

From the perspective of sales channels, dealers’ used car sales through auction channels are the largest, accounting for 45%. Although the proportion of over-the-counter sales is not the highest, it has increased compared with the first half of the year, which is also a reflection of dealers’ increased attention to over-the-counter retail. The profit of retail vehicles is higher than that of wholesale sales, and the increase in the proportion of retail vehicles has also promoted the increase in the profit of used cars.

Throughout 2021, factors such as the epidemic and chip shortages have increased dealers' operating pressure and inhibited the development of the auto market. In order to help dealers tide over the difficulties and promote the development of the industry, the state has introduced a series of policies in the used car sector, such as tax reductions for used car dealers and cross-provincial used car transactions, which effectively alleviated the high cost, long cycle, and inconvenience of used car transactions in different regions.

However, there are still a series of problems and challenges in terms of the convenience of used car transactions. The circulation of National V vehicles across the country is still subject to certain restrictions. Some areas still have household registration restrictions on used car purchases. The process of vehicle inspection in other places is complicated. The commodity attributes of used cars are not clear, resulting in limited used car operations in some cities. These problems still exist.

During the survey, dealers also hoped that manufacturers could appropriately adjust business policies, increase support and subsidies, and step up publicity for certified used cars to help dealers stabilize operations and improve profitability.

When it comes to expectations for used car sales in 2022, dealers are confident that used car sales will increase this year. Among them, about 95% of dealers remain optimistic about the used car market in 2022, and more than 40% of dealers believe that used car sales will increase by more than 10% this year.

This survival survey was launched in early January this year, when the epidemic was relatively stable, used car sales were higher than the same period last year, and dealers were optimistic. As time entered March, the epidemic recurred in multiple places, and the anti-epidemic situation was complex and severe. Some cities with serious epidemics have taken prevention and control measures such as closing the city or closing some areas. Dealers in these areas have suspended business activities, and operating pressure has increased sharply.

With the impact of the epidemic, problems such as chip shortages and rising prices of automobile raw materials have become increasingly prominent, resulting in insufficient supply and overall increases in automobile prices. Some manufacturers have even suspended automobile production. In the short term, rising prices of new cars will promote the increase in sales and prices of used cars, but in the long run, both new and used cars will be greatly impacted, inhibiting the development of the entire automobile industry.

In the later period, under the influence of the ever-changing epidemic and chip shortages, the operating conditions of dealers and how dealers conduct their used car business are still areas we continue to pay attention to.

We look forward to more OEMs and dealers participating in the "Dealer Survival Status Survey" regularly conducted by the China Automobile Dealers Association. The China Automobile Dealers Association will continue to maintain communication with the government and manufacturers, provide feedback on the current status of the automobile distribution industry, strive to resolve the demands of member companies, and promote the healthy development of the industry.

The “Dealer Survival Status Survey – Used Car Business Report” contains basic information on dealers’ used car operations, operating conditions, revenue and profits, vehicle source channels, sales channels, policy recommendations and expectations, etc.

The detailed version of "Dealer Survival Status Survey-Used Car Business Report" will be released at the "2022 Automobile Distribution Industry Blue Book Forum" offline meeting. To obtain the detailed version of the report and learn more about the industry content, please pay attention to and participate in the 2022 Automobile Distribution Industry Blue Book Forum event.

The "2022 Automotive Distribution Industry Blue Book Forum" will be held in the form of an online and offline meeting: the online meeting will be held from April 27 to 29, 2022, and the offline meeting will be held in May and June according to the epidemic situation. The specific time and location will be notified separately. For more information about the Blue Book Forum, please make an appointment for "live broadcast" to learn about the detailed meeting content.

<<:  China Automobile Dealers Association: Regional market analysis of new energy passenger vehicles in March 2022

>>:  Oculus founder: Virtual reality will replace mobile phones

Recommend

Should you turn off your phone before going to bed at night?

Before going to bed at night Do you have the habi...

Fantasy Channel v2.8.7 Primary School Classroom and Other Channels

There are elementary school classes for grades 1-...

Where can I get the Wenchang Pagoda? Where is Wenchang Tower effective?

Now, there are enough Feng Shui mascots on the ma...

Explore the mystery of lunar soil during the Mid-Autumn Festival

Chairman Mao wrote in the poem "Shui Tiao Ge...

How much does it cost to rent a website server?

Any industry can develop its own website. Nowaday...

Long-term fatigue after Yang Kang, beware of "catching COVID-19"!

More and more people say that they experience sym...