Car dealers collectively enter the transition period

The loss situation of this round of car dealerships not only includes first-tier cities such as Beijing, Shanghai, and Guangzhou, but also covers the entire automotive market in China, regardless of the eastern coastal cities and the third- and fourth-tier cities in the west.

If profits decline, losses, runs, and fights become the norm, then there is a problem with the dealer's business model in the current situation.

The reporter’s investigation revealed that this round of automobile dealers’ loss situation not only includes first-tier cities from Beijing, Shanghai, and Guangzhou, but also covers the entire automotive market in China, regardless of the eastern coastal cities and the third- and fourth-tier cities in the west.

Shen Jinjun, chairman of the China Automobile Dealers Association, said in an interview with a reporter from the First Financial Daily that the current concentration of losses in distributors indicates that the entire business model of Chinese automobiles has experienced problems. The reasons for this situation include two points: First, excess production capacity of automobile manufacturers; second, blind investment of dealers in the previous period.

Shen Jinjun said that the change in the automotive market situation also means that China's auto market is mature. Auto companies and distributors should change their business thinking and mode. They should be guided by the “automobile-oriented” business model in the past and oriented toward “consumption”. The development of the model.

Comprehensive loss

In the past six months, there have been incidents in which distributors' capital chains have broken and run in many cities across the country. According to our reporter’s interviews with more than ten 4S stores in Beijing, Zhengzhou, and Dongying, the average sales of these dealers from January to May this year fell by almost one-third from the same period last year.

An example of a professional manager of a 4S store familiar with the Dongying Automobile Market told reporters: “During 2012, Dongying had only one Beijing Hyundai 4S store. Its monthly sales were about 90 units. This year, Dongying has 4 Hyundai 4S stores in Beijing. In May, the sales of Beijing Hyundai in the region did not reach 200 vehicles." “A lot of 4S stores in Dongying have not been able to pay salaries. At present, the 4S stores of Mercedes-Benz, BMW, and Audi are relatively comfortable.”

Compared with the third and fourth tier cities, luxury brand dealers are also difficult to survive in first-tier markets like Beijing. An investor of the Beijing Auto Dealer Group, who declined to be named, told the "First Financial Daily" reporter that compared with the same period of last year, this year's profit fell by at least 30%. "The loss of customers in the new car sales loss and after-sales service market is the main reason." "You can't imagine that the price of an Audi A6 after the discount is less than 300,000 yuan."

In the context of such luxury car price cuts, the Beijing market has seen a rare downturn in the prices of all mid- to low-end car products. In this way, on the Beijing market, “only old stores (4S stores that have been in business for more than 3 years) can survive, and newly-built dealerships are almost completely finished.” The above Beijing dealer said.

After reviewing the financial statements of listed companies in China’s auto dealerships in the first quarter, the company’s net profit in the first quarter of the year, SINOMACH (600335.SH), increased by 9.5% year-on-year to reach RMB 163 million. The research report finds that the reason for the company's profit comes from the sale of imported vehicles (according to the 2014 financial report, its share of control over the imported car market in China was 21.96%). However, in the retail sector, the company’s business also faced tremendous pressure. In the first quarter, the company’s turnover dropped by 27.5% year-on-year, and the net cash flow dropped by 119.8%. The company is facing huge financial pressure and inventory pressure.

The situation of the other A-share listed company, Giant Group (601258.SH), was even less optimistic. In the first quarter, the company’s operating income fell by 17.34%, and the net profit attributable to shareholders of listed companies fell sharply by 54.7% to RMB 36.22 million. In the same way, 8 Hong Kong stock distributor groups such as Zhengtong Automobile, Baoxin Auto, Harmony Auto, Meidong Automobile, Rundong Automobile, Xinfeng Automobile, Yongda Automobile, and Zhongsheng Automobile also saw a drop in net profit.

Fighting, running

On June 15th, a video swiped through the WeChat circle of friends: The sales consultant of the Chongqing Auto Show staged a "whole military exercise."

The incident occurred between two stores on the same brand and in the same booth. Due to improper communication, there was disagreement on the arrangement of the sales division of labor, and there was no mediation of management personnel. As a result, there was a fight. Although the conflict was stopped on the spot, it quickly triggered another fight outside the exhibition hall.

A dealer witnessed by the scene said in an interview with the media that due to the declining sales volume, fierce competition, huge inventory pressure from dealers, and shortage of funds, almost every 4S shop valued the sales platform of the auto show so as to promote sales. , reduce inventory, ease financial pressure.

In order to prepare for the auto show, the dealers spend huge sums. Of course, such auto shows will also be subsidized by car manufacturers. Such subsidies generally have to sign agreements with manufacturers. After the auto show has completed certain sales, it will have a chance to get them. When a sales manager formulates auto sales policies, he generally uses a “staircase” approach to stimulate sales consultants to achieve better sales results. With each step, sales commissions and bonuses are greatly increased.

After the baptism of the off-season, most sales consultants are looking forward to reaching their monthly targets at the auto show and storing potential winter customers for the upcoming July and August. Therefore, at this stage, nerves are generally nervous, and the competition at the auto show is naturally intense. In order to compete for a client, sales consultants frequently hit each other.

In fact, it is not uncommon for this kind of auto show to stage a fight and it has also happened at auto shows in Shenzhen, Hangzhou and other places.

At the end of May this year, Henan Yongxin Group, which has 17 auto 4S stores, broke its capital chain and caused more than 300 owners to suffer from the predicament of being unable to get a license because their bosses closed their doors.

Since 2014, there have been a number of cases in which dealers have been running in the country, covering traditional auto consumption provinces such as Jiangsu, Zhejiang, Shandong, and Guangdong.

A Zhengzhou car dealer said in an interview with this reporter that the key reason for this year's decline in Zhengzhou’s auto market was due to poor social consumption, but car dealerships in the automobile circulation service industry should not be closed. Most of the road dealers did not put all their energy into the business development of 4S stores. Some of them also involved the real estate industry. The capital flow was moved to the land market, so they lost their ability to resist the market.

Rapid high-return model collapsed?

In the past ten years of rapid development, the high profit rate of Chinese auto dealers has attracted many capitals to follow up. Coupled with the need for auto companies to expand their networks, starting in 2010, many speculative capitals have entered China's automobile circulation sector.

China's dealer investors also have a lot of speculative psychology. At the same time as the rapid expansion of the Internet, funds are increasingly unhealthy. For example, they use short-term loans and long-term investment to build stores, build stores through high-interest financing, and even illegal fund-raising to build stores, and look forward to a quick return on investment. Such a multitude of eager attitudes have determined that investors have excessive demands on short-term profits when they are planning to operate a store.

Under this circumstance, investors are more willing to hire high-paying professional managers, such as the general manager and operation director of 4S stores, and are reluctant to consider options or equity; they are willing to study the manufacturer's policies to withdraw rebates, but are unwilling to work hard to build internal. Operational system and shop-side brand operation; willing to airborne general manager expects rapid results, and is unwilling to devote to the training of echelons; is willing to assess current profit targets and is unwilling to assess medium and long-term basic work; precisely because of this, it forced the general manager to also Must use short-term behavior to conduct operations management.

Therefore, when Internet start-up companies prefer to cut off profits and accumulate customers, the 4S store group, which has mastered the most customer data, cannot achieve data sharing within the group. When the used car business and financial business are increasingly favored, because of the gray The space is too large and the entire group's integrated operations flow into form.

A practitioner of the used car industry told reporters: “You can't imagine the complicated interests involved. This includes not only sales consultants dealing in private but also company sales directors, replacement directors, and the general interests of the shop. Exploitation, dealer groups to change the current situation, we must come to a complete change."

According to the survey, at present, only about 20% of 4S shop stores in China can always be in a company for more than 5 years, and they have grown from the grassroots level. More than 50% of professional managers rely on constant turnover to get general manager. Positions, the longest working time in each store is no more than three years.

As the joint venture company listed on the New York Stock Exchange, according to a description of a former senior executive who left the company, the biggest problem is: "The boss does not know to share, although in the early stage of the company's listing, he also assigned various professional managers. A certain amount of stock rights, but all of them are held by the chairman of the board of directors. Professional managers do not share the dividends of the company's development. Who will go for such management and management?

Way Out: Business Consumers

Although the major dealership groups had an “optimistic” pre-judgment on the market situation in the second half of the year when interviewed by this reporter, Shen Jinjun could not give a time when the Chinese auto market returned to normal track. He said that China's auto market has entered a period of in-depth adjustment. Whether it is a distributor or a manufacturer, it must shift its business ideas from a purely product-oriented approach to a consumer-oriented approach. "The sooner the transition, the more you have the initiative in the future."

Shen Jinjun believes that the maturity of the Chinese auto market means that the Chinese market has entered a period of oversupply. In the past, the main function of China’s auto dealers was new car sales, and it was only recently that “post-sales maintenance” was at the core of operations. This business model is too monotonous and the dealers are too weak in risk resistance. Dealers need to change their thinking in order to change this kind of situation.

When cars are gradually transformed from high-end consumer goods to transportation tools, the sales model of automobiles should be adjusted accordingly. Most non-luxury branded 4S stores should minimize luxury investment in venues and hardware in stores to reduce asset investment and increase resources. Many matches match the security of the shop-side service experience.

In addition to low-cost operations, the profitability structure of dealers that can survive the current industrial adjustment should mainly come from the increase in replacement sales volume and financial profitability of second-hand automobiles; the boutique business and maintenance business will surely substantially increase after gross profit. reduce. In this process, dealer investors first need to allow professional managers to share the continued development of the store's dividends, and no longer use some short-sighted behavior.