Toward the end of the year, the operation of several car dealers to change brands has aroused concern. Luxury brand dealers terminated their original brand representation and switched to selling new car brands. On the other hand, dealers of failed new car brands have learned from their mistakes and are considering choosing the more secure traditional big brands.

The most attention has been paid to the recent move by the largest Audi dealerships in Beijing and Zhengzhou, where both stores have changed their ways to sell “ask the world” at the same time. Immediately after, more luxury brand dealers changed their flag, including the largest Mercedes-Benz 4S store in Changsha and Chongqing Audi Dadukou store will be changed to ask the world of user centers.

For a while, “Ask Biz” seems to have begun its reorganization of domestic luxury auto brand channels. The reason behind this is not complicated, on the one hand, the market share of new energy vehicles continues to expand, dominated by traditional brands of fuel vehicles market share continues to shrink; on the other hand, under the impact of the price war, the luxury car brands have bid farewell to the high profits, its new energy products are also selling poorly, resulting in part of the 4S stores have been difficult to maintain basic operations. And Huawei backed ask the world is not only the only high-end new energy brand to achieve profitability, and is currently in the rapid development stage, sales are rising. Taking advantage of the end of the year car buying boom to join the world, grab a share of the hot soup, this is the idea of most dealers.

In fact, the trend of dealers to change brands and not only in the luxury car brand camp, more accurately said that the traditional fuel car dealers began to batch switch to new energy vehicle brand dealers. Since the beginning of this year, several major domestic dealer groups have announced large-scale expansion or batch turnover as authorized stores for new energy vehicle brands.

“The new energy penetration rate is rising, and if the new energy sales share of traditional brands doesn't catch up quickly enough to approach the industry level, then the trend of traditional brand 4S stores changing over to new energy will continue.” Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, told the Economic Observer that she expects 4,000 4S stores to retire from the network this year, a figure that represents a 60% increase over last year.

Luxury brand 4S stores “abandon the old and welcome the new”

Luxury brand 4S store diversion in the fourth quarter of this year focused on staging. in October, Beijing two luxury car brand 4S store successively posted a closed store notice, a BMW Star De Bao, a Cadillac store is Hui Jing Coleman Automobile Trade Company. Both stores said that because of poor management, the financial pressure is too heavy and closed store. Not long ago, Tianjin's largest Audi brand 4S store Yonghao Audi

also announced the closure. Among them, BMW Xingdebao was particularly concerned because it was the first BMW 5S store.

Star Depot opened in June 2012, is the world's first BMW 5S authorized dealers, due to the store's large scale, and in accordance with the sustainable concept of design, so the total investment of more than 320 million yuan, its opening ceremony was also a major event in the field of luxury cars in the Beijing area that year. It is reported that the direct cause of the break in the capital chain and the termination of authorization by BMW is the deterioration of the operating conditions of its parent company, Singapore GA Group, which has incurred a loss due to the fierce price war waged by China's major automobile brands, as shown in the half-yearly report of the GA Group, with a decline in the revenues and gross profits of the GA Group.

This year, the automobile market continued price war led to many brands of dealers in the price inversion state, that is, the terminal sales price is lower than the manufacturer's wholesale price. Even with rebate incentives from manufacturers, it is impossible to make up for the losses caused by the price difference. Luxury brands are the hardest hit by the price war, BMW had announced in the middle of the year to withdraw from the price war, July and August market sales fell precipitously, so that BMW had to return to the battlefield in September. The luxury car 4S stores were unable to sustain losses for too long due to high daily operating costs as they were built, decorated and provided services according to the uniform high standards of luxury brands.

As the end of 2024 approaches, more dealers have begun to “abandon the old and welcome the new”. Beijing Huayang Aotong, the largest FAW Audi dealership in Beijing, and Zhengzhou Zhongsheng Huidi, the largest FAW Audi dealership in Zhengzhou, have both recently announced that they have switched to selling models of the Qijie brand. In Changsha, the largest Mercedes-Benz 4S store has been transformed into a flagship store of Ask Biz after a brief closure, and held a grand opening ceremony in early December. As each luxury brand has unique requirements for the design style of its 4S stores, Inquirer has become the most diversified automobile brand in terms of store aesthetics.

The sales business of luxury car brands is the largest revenue support for several major domestic auto dealer groups. Currently, major domestic luxury car dealer groups include Zhongsheng Group, Lei Xing Xing, Yongda Auto, Hengxin Group and Zhengtong Group. Apart from Lei Shing Hong, which specializes in Mercedes-Benz, it has become a common choice for other dealer groups to develop more outlets for new energy brands.

As one of the largest dealer groups in China, Zhongsheng Group has made the fastest move to change its brand. In mid-November, Zhongsheng Group announced that it had signed a preliminary negotiation agreement with Sailix, agreeing to further discuss cooperation in distributing its new energy vehicles (the Ask brand.) On Nov. 18, Zhongsheng Group's first Ask 4S store opened.

According to the news, Zhongsheng has joined the team of agents of Huawei Choice Vehicles (four “world” brands, including Ask Boundary) and successfully got the right to operate about 50 stores, and the first batch of brands to be changed and replaced include BMW, Mercedes-Benz, Audi, and Jaguar Land Rover and other luxury brands. At present, the total number of dealerships under the Zhongsheng flag is more than 400, and the size of this addition is more than 10%. Yongda Auto made the same choice, announcing that it would open at least 15 Huawei Smart Car authorized outlets by the end of this year, and expand the scale to 30 in the first quarter of next year.

The change in sales volume more intuitively explains the motivation for the choice of these large dealer groups. In the first three quarters of this year, Mercedes-Benz BMW Audi's total sales in China both declined, while the cumulative sales of new energy vehicles in Sallies reached 389,500 units, up 255.26% year-on-year, pulled by the hot sales of the Askworld brand.

With the announcement of the pre-sale price of the Zunjie S800, Huawei has realized the integration of the “four worlds”, with products covering a price range of 250,000-1.5 million yuan. The data released by Huawei's Hongmeng Zhixing shows that the whole series delivered 41,931 new cars in November, and for seven consecutive months, it has been ranked as China's auto brand transaction average price TOP 1. In contrast to the average price of the traditional luxury car sold models that have been continuously lowered, Huawei's average price of the smart car has been increased from more than 300,000 yuan to close to 400,000 yuan. Coupled with the Huawei car BU split in the near future, and Changan, Sailis joint venture subsidiary cited hope that will soon enter into formal operation, the industry for the four “world” brand cluster effect in 2025 have given high expectations.

In accordance with the previously disclosed plan, Huawei in 2024 before the end of the number of Hongmeng Zhixing stores expanded to 800, and in 2025 impact 1000 stores, the industry estimates that a large part of this will be by the traditional luxury brand 4S stores to join.

Retirement and turn to new energy is the trend

Luxury brand 4S stores turn to ask the world behind the fact that the survival of automobile dealers continue to be grim. Statistics from the China Automobile Dealers Association show that the percentage of auto dealers losing money in 2023 was 43.5%, and the figure expanded to 50.8% in the first half of 2024, with only about 1/3 of the dealers remaining profitable, 18.4% of the dealers completing the set sales tasks, and the average single-store loss amounting to 1.78 million yuan.

Another set of statistics is: more than 8,000 4S stores closed in the past four years, of which more than 2,540 4S stores closed in 2023 alone. Lang Xuehong predicted that the scale of 4S store retreat will reach 4,000 this year.

“In the last two years, the sales of traditional fuel vehicles have been contracting at a rate of roughly 20% per year, the number of dealers will inevitably have to be reduced, and if it is not, it will mean that the survival of the dealers will be even more difficult.” Lang Xuehong explained that on the one hand, the sales volume amortized to each dealer will be reduced, on the other hand, in the case of luxury brands, the discount rate for new cars will continue to increase, and this year has reached 20%, so traditional dealers are bound to reduce their size if they want to survive.

“There will still be dealers flipping in the future, or even there will be part of the exit from the business.” Lang Xuehong said that at this stage, she suggests that OEMs take a more economical channel model, such as the relatively high investment in large flagship stores into two, or even one into three.

In fact, the current vehicle companies have begun to take the initiative to shrink the brand camp, led by Geely, SAIC, car companies are the past few years piled up incubated sub-brands to merge, and subsequently reduce the number of channel brands.

According to the survey statistics of the Automobile Circulation Association, the total domestic automobile channel network (including the sum of 4S stores, directly-managed stores, brand showrooms and other forms) has seen stagnant growth in the first half of this year. “The past few years still maintained a slight growth. In the future, channels like the 4S store format will definitely contract as well.” As for the profitability of dealers, Lang Xuehong said that the loss surface will not necessarily expand, but the average profit is likely to decline.

Since July this year, the penetration rate of new energy vehicles in China has exceeded 50%, and the share of fuel vehicles has been shrinking. Under the pressure of deteriorating survival situation, traditional dealer groups began to appear its many 4S stores to withdraw from the fuel car network.

At present, it seems that the changes in the automobile dealer network are mainly manifested in two trends: fuel vehicles are changed to new energy vehicles; luxury car brands are changed to new car brands. Strictly speaking, the latter is considered a special case of the former. It is reported that at present, Guanghui Auto has 70 new energy brands authorized. Harmony Motors has obtained BYD's distribution authorization in a number of overseas markets and BAE's dealer authorization in Hong Kong and Thailand. During this year, Harmony Motors has opened more than ten BYD overseas dealerships intensively. In addition to actively exploring Huawei's Smart Car network, Yongda Auto has also obtained the authorization of new energy brand outlets such as Xiaopeng Automobile, Zhiji Automobile and Xiaomi Automobile.

However, not all new car brands are traditional 4S targets. Given that most new energy car brands are still in the red, and there are constantly new car brands flash crash, dealers are also more cautious about the choice of new energy brands. According to statistics from the Automobile Dealers Association in the first half of the year, 1/4 of the dealers who retired from the network were new energy brands.