Introducing over 100 luxury car dealers at once "is the achievement that Tengshi Automobile has achieved since its channel model transformation in June last year.
Recently, the latest news came from the closure of BMW's world's first 5S store, which has been leased by BYD dealer North Huapeng Group and will operate the Tengshi and Equation Leopard brands at the location. In addition, several 4S groups such as Jianfa Group and Hengxin Group have also chosen to cooperate with Tengshi Automobile.
Not long ago, Zhongsheng Group closed several BBA 4S stores and rebuilt more than 40 Wanjie stores; Yongda Group plans to open 30 Wanjie stores; More than 40 traditional luxury brand dealers have switched to NIO.
Luxury car dealers are changing their appearance one after another, does this mean that the "golden age" of selling BBA cars for profit has come to an end? What impact has the defection of luxury car dealers brought? Is the automobile sales market facing an unprecedented 'big change'?
01. The transformation of traditional dealers has become a "must answer question"
According to relevant media reports, there will be about 600 4S stores in Chongqing in 2023, but more than 100 will retire in 2024, most of which are gasoline car brands. At the same time, Chongqing has also added over 100 new energy vehicle brand stores.
The report further pointed out that the local 4S group Baishida has been transforming since 2021. Currently, the ratio of new energy and traditional fuel vehicle stores is about 4:6, and the number of new energy stores has exceeded 10, half of which are transformed from traditional brands.
In addition, Longhua Group, which once sold over 30000 vehicles annually in Chongqing and ranked among the top five car dealerships, has leased multiple traditional 4S stores to new energy brands for property management.
Behind the accelerated transformation of luxury car dealers represented by BBA, there is a close correlation with the "three major negative logics".
Firstly, the decline in sales of traditional luxury cars in BBA has severely reduced the value of existing 4S stores;
Secondly, the accelerated replacement of fuel vehicles with new energy has led to a significant reduction in the after-sales business that 4S stores heavily rely on. Traditional luxury car brands are also struggling with the layout of their new energy product lines, making the transition to electrification difficult;
Finally, the capital market is not optimistic about the long-term commercial value of traditional distribution models. Recently, news about Zhongsheng Group's rating outlook turning negative, net profit halving, and market value evaporating by billions has been reported in the newspapers. The reason for its downgrade is that capital believes that Zhongsheng Holdings' profit prospects for the next 12 months and the deleveraging process are facing challenges.
These three negative logics have been fully validated between 2023-2024, leading to a significant decline in dealer profits and a sharp drop in the stock price of listed 4S groups. The change in the number of dealer networks is a direct reflection of the survival pressure on dealers. According to data from the China Automobile Dealers Association, by 2024, there will be around 4000 dealers who have withdrawn from the network and changed their license plates.
These dealers who have withdrawn from the network are not those who have gone bankrupt or run away. The vast majority of them are adjusting their brand management strategies, that is, closing traditional fuel vehicle brands and opening independent new energy brands instead.
More and more dealers are choosing to "switch sides" and even willing to break ties with manufacturers, which undoubtedly indicates that the golden age of making profits by selling luxury cars is over, and transformation has become an unavoidable "must answer question".