July 25, 2024

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China’s Auto Market Crashes! OVER 4,000 4S Stores Shut Down(11/Day), 50% In Losses, Sales Tumble 80%

2 min read

As we cast an analytical lens over the shifting dynamics of China’s automotive market, a dramatic change of an unprecedented scale comes to light. During its peak in 2017, both the Chinese economy and the fossil fuel vehicle industry reached a soaring high in sales. However, an unexpected fall from grace followed, evidenced by a peculiar downturn in automotive sales in 2018, presenting a negative growth for the first time in two decades.
By 2022, China’s automotive market was still grappling with a sustained slump. A steady decline in consumer buying power and demand further exacerbated the weakening car sales. Data from SAIC Motor presented a stark contrast with a plunge of 72% and 71% respectively in May year-over-year sales compared to 2021 for market dominators SAIC Volkswagen and SAIC General Motors, .
The continued decrease of fossil fuel vehicle sales has resulted in a progressive income shrinkage for traditional sales channels, the notably high-cost 4S stores, referring to auto dealership authorised by a manufacturer to engage in the four businesses relating to sales, spare parts, service and survey. Numerous stores are experiencing an imbalance between income and expenditure, with the most severely affected forced to shut their doors. The data reveals a bleak picture: over 1900 4S stores closed in 2021, and this figure surged to 4000 by 2022. An overwhelming majority of 4S stores are operating at a loss, making their operational conditions the worst in a decade. To put this into perspective, an average of 11 4S stores are closing every day.
#chinaauto #automarket #chinaeconomy #chinaobserver
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