Automotive 4S stores have closed down, automobile businessmen how to save themselves?

The first thing to point out is that the reference to 4S stores closing down is actually not objective. In fact, although the 4S store is in a difficult period of operation, but choose to exit the investor is still few and far between, even if some people exit, but also to quickly find a large group to take over. That is to say, the overall number of automobile 4S stores is still basically stable, if we count including some new entrants to the brand in the continued opening of stores, then the total number of 4S stores in the country is also a steady rise.

So where are the major problems encountered by 4S stores now? I think it's the sharp drop in new car sales and the sharp reduction in new car profit margins. Rooted in the China Automobile Dealers Association released the top 100 dealers gross profit structure, we can see that the gross profit of new car sales accounted for a decline from 42% in 13 years to 39.4% in 14 years, and it is believed that by this year will be further reduced. This shows that large auto dealers are no longer living off new car sales, but are constantly making larger base figures and tapping into the profit margins of after-sales and horizontal business.

The first thing to point out is that the reference to the wave of 4S store closures is actually not objective. In fact, although the current 4S stores are in a difficult period of operation, but the investors who choose to withdraw are still few and far between, even if someone withdraws, but also be able to quickly find a large group to take over. That is to say, the overall number of automobile 4S stores is still basically stable, if we count including some new entrants in the brand continues to open stores, then the total number of 4S stores in the country is also a steady rise. So, where are the main problems encountered by 4S stores now? I think it is the sharp decline in new car sales, new car profit margins significantly reduced. The absolute China Automobile Dealers Association released the top 100 dealers gross profit structure, we can see that the gross profit of new car sales accounted for from 13 years of 42% down to 14 years of 39.4%, it is believed that by this year will be further reduced. This suggests that large car dealers are no longer living off new car sales, but are constantly working on bigger base figures and tapping into the margins of after-sales and horizontal business.

I'll give you an example, there are areas where Audi dealers are selling cars at a loss almost across the board, so the dealers' strategy is to drop what was once a 300-unit-per-month target to about 200 units at present, so that they can achieve an overall break-even. Dealers and car companies are in fact the relationship between the lips and teeth, car companies are unlikely to force dealers in order to achieve the KPIs of the car and forced to press the warehouse, and dealers are not likely to sell cars at a loss because of the sale of sales, which is a very skillful balance of the state. In my opinion, the cold winter period for sales may be good for large auto dealer groups, who are eyeing carefully selected prey, and once they find a suitable sheep they will immediately pounce on it, now the acquisition cost is much lower than the peak season. Although we say that there is no automobile dealership closure wave, but the dealers are transforming has long been thinking about the problem. Dealers how to transform? We can still look at the above chart of the top 100 dealers of the composition of revenue: new car sales revenue is still the big head of revenue, but the share is decreasing; followed by parts and repair services, revenue also fell a few percentage points; compared to the used car business, finance and insurance, as well as other business is rising sharply. Compare that to U.S. dealerships, where new-car revenue is but half of the total, followed by used-car sales and then parts and accessories.

This data suggests a few things: first, new car prices are falling, and while volumes are rising, the revenue share is falling; second, the churn rate for repair and maintenance services is rising because 4S stores are profiteering in this area; third, there is still very much room for improvement in the used-vehicle business; and, fourth, consumers aren't really all that interested in the finance and insurance services offered by 4S stores.

In fact, we analyze the current situation can indeed prove the above points. First of all, the sales level, automotive e-commerce tide is coming, but automotive e-commerce is definitely only effective for large groups, and it is not at all the turn of small dealers to eat meat. To the recent auto home began exclusive sales of SsangYong as an example, the auto home to enable their own advertising space, call center to support the SsangYong sales, while the former SsangYong dealer is only responsible for test drive and delivery services, the transaction of a car home to pay service fees (to that effect). In this, SsangYong in the country's general agent is in fact huge group, the reason why this auto e-commerce can be done up is entirely because of the huge group can complete the overall logistics chain and supply support, and this case is placed on a large brand in fact is unlikely to be replicated. Similarly, easy car also began to do underwriting, customization, and intermediary services, the reason is similar, automotive vertical sites want to use their own traffic advantage, the original dealers into a landing service station, the traditional dealers to do the hard work, earning is the service fee, the final automotive e-commerce for auto dealers is not the way out, instead, it may be a pit.

But I also said that automotive e-commerce is still beneficial to large automotive groups. The reason for this is that a large automotive group with most of its brands can actually bypass automotive verticals altogether and set up its own sales platform for e-commerce activities. This is more like the current air ticket sales, automotive vertical website is Ctrip, large automotive group is the major airlines, and in the future there will be some price comparison website - similar to where to go. From the trend, this is the probability of events, the current is only automotive vertical sites and large auto dealer groups to join forces to develop the stage of e-commerce, and later will be cut off from each other, for small dealers, there is almost no choice, either to be acquired, or to become a supplier of automotive vertical sites.

Let's take a look at the maintenance segment. Numerous O2O auto service startups are now hugely popular, stealing after-sales service business from many car dealers. But an industry insider I interviewed pointed out that O2O services actually have no competitiveness for dealers, who are currently just reluctant to give up the high profits at their fingertips, but once the auto dealers want to make a push into the after-sales, they just need to pull down the after-sales price, and the return rate can be increased dramatically, and at that time, there is actually not much resistance to the low-priced strategy that the O2O services rely on to survive. With the reduction of business, O2O service technician income began to decline, the talent will soon be lost, then the quality of service is also reduced, then more consumers will choose 4S stores. Of course, at this time, the 4S store after-sales maintenance link gross margin will also fall sharply, but the victory is stable and sustainable, and this will become the most important source of income for small dealers.

The most likely part of the future development is the used car sales business. On the one hand, the major brands are pushing the branded used car business, on the other hand, since the dealers are still the channel for new car delivery, under the right price premise, the owners will prioritize the replacement service, after all, it is more seamless in the process, so the dealers can fully develop as long as they can control the source of used cars. Through the refurbishment and repair business, can be sold at a premium for its own low-priced used cars, which is obviously the key to the high profitability of the used car, and more importantly, also lies in this with the 4S store reputation endorsement.

As for financial and insurance services, I personally don't think so. Insurance due to the current network of car insurance surge, 4S stores have been unable to take advantage of what is cheap, more through the insurance agent in the difference in earning, and financial services is mainly the host plant's financial company is responsible for, 4S stores are also in accordance with the financial penetration rate of access to subsidies, a few points of revenue. Unless the large auto dealer group to build their own financial company, to get better benefits, but to pay the cost and risk is also extremely considerable. There are other things such as extended warranty service, which can only be said to be better than nothing.

What's the point of talking about widespread closures without disruption coming out? Year after year, dealers close their doors, and the news media always amplify and cause conversation. When doing marketing, there is a term called: "a sentence to intercept"! The goal is to get attention.

Go look at the military forum is not always the United States kneeling China's news, the editor are not stupid, they know that this is written to increase the number of views. So isn't the news coverage just to drive traffic and increase ad revenue?

It is undeniable that the economy is going down, but like saying that 4S is closing down in a big way, I didn't find it. I've seen news of just 7 or 8 closures since the beginning of the year. Not a single brand. The reason for the closure is because the capital chain breaks, but buddy, 4S store from opening to operate over two or three years, the capital chain which will be so easy to break? The boss will not die until he is dead. Even dealers withdraw from the network to hype a news, do not see, since there is a 4S store, every year there are withdrawals, normal.

The first thing I said was that if you want an industry to die out, you must first have something disruptive to come out.

Automotive home and easy car to do automotive consulting platform and promotion platform for so many years, if the integration of the host factory resources to do business in the automotive trade, is not desirable, the answer is desirable, the automotive home and easy car is currently in the trial level of the line imported car sales, I have contact with the whole set of their processes. First of all, I said, the whole process and system is simply a pile of scum.

Then I unintentionally asked: why only parallel imported cars?

They replied: because the OEMs don't give cars to them.

The doubts in my mind suddenly became clear.

Those who say what Ali Tmall Jingdong car sales, are scattered, what to do what to go, that sells the car is a 4S store car, not the host factory direct car. And now is not popular what B2C sales, O2O sales?

I'm sorry to tell you, now there is such an innovative company, play with the host factory, must meet a condition, the delivery program must go to the 4S store, the number of transactions to be counted in the 4S store, as for the share of the incentives how to calculate, that is another matter. The purpose of doing so is two: first, to ensure the interests of car owners, second, to ensure the customer experience, third, to ensure that the source of the car is legal. Fourth, to ensure political correctness. If you detach from these several, want to give the car directly to the owner's hands, you when the car is a household appliance? A trailer towing a car to take a trip, who bears the cost? Doesn't that even count as a cost?

4S stores open so many, know why? Coverage is a great indicator of sales improvement! An increase in coverage is a greater guarantee of customer benefits, but also increases the competitiveness of the business, and it is still the customer who profits! Exclusivity in a region is disruptive to the customer experience and monopolizes the market. Do you understand market economy? Auto dealer ports, is currently China's market economy is the most fully embodied industry.

With that said, do you get it?

It's not the dealers who need to change, don't keep pointing the finger at the 4S stores

Whether to change or not to change, to fall or not to fall, it depends on the face of the OEMs. These enterprises are central enterprises and state-owned enterprises. The sales management approach is FAW, Dongfeng, SAIC they drafted, and then handed over to the Development and Reform Commission (DRC), which then formed the current sales management pattern, even if you are the Great Wall or BYD if you dare to violate the "Sales Management Approach", are a violation of the law. That is to say, how to play, they themselves say.

To change is not the 4S store itself, to change is the OEM willing to cooperate with the 4S store on the principle of equality and reciprocity

What things in our country are tainted, the OEM is the master, down to the 4S store good food and good drink, eat, take, take, card and want.

Said a small detail: a Sino-Japanese joint venture brand, the Japanese executives came to China to inspect, after arriving at a 4S store, the first is to convene all the staff, and then the Japanese old man stood in front of the team and bowed to everyone: everyone worked hard, thank you! After the end, the old man with the Japanese line is standing at the door to go out of the staff one by one bow. (Do you understand the gesture of both sides?)