The world of automotive sales has changed dramatically in recent years, which is remarkable. As of 2020, there are more than 30,000 4S stores nationwide, but they are closing their doors every day at an alarming rate like a bleeding body.
Surprisingly, in the past year, nearly 4,000 4S stores have been forced to withdraw or close. In the recent November, the situation was even more severe, nearly half of the country's 4S stores were temporarily closed, and more than seventy percent of the 4S stores failed to complete the sales task. It's a heart-wrenching industry scene.
The auto sales industry has undoubtedly suffered huge losses due to external difficulties such as factory shutdowns and logistical disruptions over the past three years.
However, according to the explanation of the Automobile Dealers Chamber of Commerce of the All-China Federation of Industry and Commerce, we found that there is still an internal problem, that is, the turmoil caused by the hot sale of new energy vehicles.
The profits of traditional 4S stores seem to be constantly being eaten away by internal worries, and there is even a saying that is quietly spreading: new energy vehicles are quietly strangling traditional 4S stores.
You may be curious about the "live or die" situation and wonder how it came to be. Now, let's delve into the reasons for this phenomenon and reveal the intricate relationship between new energy vehicles and traditional 4S stores. This can be seen as a grudge brought about by the alternation of the old and the new.
The ** years of the 4S store: the dealer era.
Those who are familiar with the development of the automobile market know that 4S stores have always been the main channel for car sales. Previously, only big bosses were able to enter 4S stores to pick up vehicles. Those of you who have been in the car market since 2000 know that 4S stores have always been the main business of car sales. Once, being able to go to the 4S store to pick up a car was a daily routine that only big bosses could have.
The sales model of the 4S store is actually the well-known dealer model, but I still have to elaborate on it. To put it simply, the dealer is the manufacturer's. Especially for large manufacturers, due to the huge market demand, if you also need to take on the sales business yourself, it will distract the production and manufacturing efforts, so the dealer came into being.
4S stores are essentially wholesale cars from manufacturers and then retail them to customers, a business model that was very popular in the first two decades. The main reason is that once the sales process is handled by the dealership, the car company can focus on quality control without the additional cost and effort to find customers or design marketing strategies.
Since the establishment of the first 4S store in China in 1999, there are now nearly 30,000 4S stores in China. Some powerful leading enterprises have annual sales of nearly one million vehicles, achieving an astonishing number of hundreds of billions of revenues and tens of billions of net profits.
The ** strategy implied by the 4S store makes the ** of the same car different.
The problems that come with it are also gradually becoming apparent, and the situation of different prices for the same car is becoming more and more common. For many well-known brands, a single ** business is obviously unable to meet the huge market demand, so there will be multiple 4S stores operating the same brand in the same area.
The role of the middleman, as we all know, is the main profit** is the price difference. Since 4S stores need to earn the price difference, the "original price" that customers buy is often much higher than the wholesale price. In addition, there is competition between different 4S stores, and it is often the case that they shop around for the same brand.
Moreover, car buyers are not stupid, and they quickly perceive the clues in the pricing of 4S stores. As a result, buying a car is like buying groceries and spreading rapidly. The 4S shop is no longer the exclusive domain of those big bosses, but a car market that needs to be bargained for to get a good price. It can be said that everyone is tired of 4S stores.
The trend of direct sales is sweeping: traditional car 4S stores are ushering in a cold winter.
Soon after, Tesla, the dragon slayer, made his debut. As a pioneer of the domestic direct sales model, Tesla initially spread through the Internet to facilitate direct communication between enterprises and customers, so that car companies can truly understand customer needs and accurately optimize products.
Tesla's global sales grew by a staggering 120% year-on-year in the first half of 2022 alone, a figure that reflects consumers' love for the direct sales model and continued enthusiasm for new energy vehicles.
Subsequently, Weilan also made similar measures, and successively opened a number of direct sales stores, and soon achieved remarkable results. The emergence of these successful cases has prompted many traditional car companies to follow suit, such as Ford's Electric Horse and Geely's Zeekr, which have also chosen to abandon dealers, establish their own brands, and turn to a direct sales model.
Traditional 4S stores are facing the challenge of the coming winter. Among the 11 listed companies in China, 9 companies have seen a decline in revenue and profits, among which Pangda Group was once the largest giant in China, and it has lost 15.6 billion.
According to the surging news report, at the China Automobile Dealers Industry Conference, Liu Yingzi, president of the Automobile Dealers Chamber of Commerce of the All-China Federation of Industry and Commerce, revealed that the Chamber of Commerce had conducted extensive research on the business conditions of dealers, and the results showed that more than half of the dealers had incurred losses, and some of them even faced serious losses. This is expected to continue until the end of 2022.
In the first half of this year, although the operating conditions of dealers have improved, there has been no fundamental change, and most dealers are still facing a rather difficult situation.
The emergence of the new energy wave has accelerated the pace of sales channel reform, resulting in the impact of the direct sales model on the distribution model of 4S stores, and further aggravating the survival challenges of 4S stores.
New forces are impacting the traditional 4S store model, and this is exactly what they have created.
Of course, it can be said that the 4S store has reaped its own consequences, and in the face of the service comparison of the new forces, it is simply a dimensionality reduction blow.
The national uniform price of the direct seller has dealt a heavy blow to the heart of the 4S store, which is the first priority. In the past, 4S stores often deceived consumers through poor information, and many people paid high fares to buy vehicles in stock.
The direct sales model eliminates the price difference of the middleman and presents the most authentic offers and experiences directly to customers. In addition, another feature of new energy that is favored by the market is to solve after-sales problems instantly.
As we all know, the after-sales service of traditional oil trucks is quite troublesome, and you have to go to the 4S shop to solve the problem. And there, there will be enthusiastic clerks who will sell you all kinds of brand new products. As a result, your wallet will be empty, and the performance of the 4S store will be able to meet expectations.
According to statistics, due to the particularity of new energy vehicles, they do not need so much maintenance and after-sales, so their after-sales projects can be reduced by more than 90% compared with traditional fuel vehicles. In the total profit of a 4S store, after-sales service accounts for as much as 70%.
The Challenges of Direct Selling: The Practical Benefits of the Dealer Model.
Could it be said that the 4S store will come to an end under the wave of the prevailing direct sales model?In fact, the dealer model is not without advantages, and the reason why it can re-emerge is not without reason, and it requires a certain amount of ability.
Tesla has also recently experienced an inventory backlog, which is quite surprising among companies that have always claimed to have "zero inventory". Although the inventory problem has eased after several price cuts, some old car owners are not satisfied with this state.
In previous 4S store sales, this almost never happened. The 4S store plays the role of a reservoir in the entire automobile industry chain, which can provide a certain relief for the inventory problem of car companies.
On the other hand, dealers can provide stable cash flow for car companies. Once a dealer buys a large number of cars from a car company, they transfer the payment to the manufacturer's account as soon as possible.
Although the customer has not yet purchased the car, the car company has already received the payment, which is equivalent to getting the funds in advance. Since the car company has a strong position in the industry and has set an account period of more than 1 year, this cash will not be paid immediately to the upstream parts suppliers.
This will allow OEMs to obtain a large amount of cash flow in a short period of time to expand their production scale. These emerging forces are obviously a little powerless in the face of large-scale, and when the annual sales reach about 300,000 units, the direct sales model will gradually feel the pressure on funds and inventory.
The competition between direct selling and distribution does not have to be life-and-death.
It is no accident that dealers have been able to occupy the car sales market for a long time, as they say, existence is justification. In my opinion, the relationship between dealers and car companies is like a symbiotic relationship. Although they may have been in friction with each other for a long time, they will always play a role in each other when needed.
Who can say for sure what the car sales model of the future will look like?It is not necessary to say which model will replace which model.
The traditional dealer model and the emerging direct selling model have their pros and cons. In the sales process, it is crucial to skillfully combine the interests of both parties and provide substantial convenience and benefits to the buyer.
Will you choose the dealer model or the direct sales model?