The Secretary General of the China Automobile Dealers Association, Cui Dongshu, stated today (October 7th) that this year, there has been a significant loss in new car sales in China. Car dealers nationwide are facing tight liquidity, along with the dilemma of “the more they sell, the more they lose”. They are in urgent need of relevant measures to break free from the survival crisis faced by automobile enterprises.
Cui Dongshu published an article on his WeChat public account titled “Urgent Need for Policy Support for Chinese Car Dealers in 2025”. He mentioned that currently, new car sales for Chinese car dealers are facing significant losses, with widespread issues of “operating in cash flow deficits” and “increasing risks of fund chain ruptures”, making it “difficult to escape the survival dilemma.”
According to the article, Chinese automobile dealers are currently facing two major problems. Firstly, the double pressure of weak consumer demand and high manufacturer wholesale volume has led to dealers maintaining high inventory levels. To reduce financial pressure and financing costs, dealers are forced to sell at low prices to stay afloat.
Secondly, the “price war” has led to severe mismatches in purchases and sales, resulting in dealers “losing more as they sell more.” At the same time, dealers are facing pressure in meeting financing deadlines, leading to cash flow interruptions and a sharp rise in the risk of fund chain ruptures. Currently, the existing liquidity of dealers has been “compressed to the limit”.
The article also mentions that the gross profit of Chinese car dealers is relatively low, the market competition is fierce, and profits from used cars have not been effectively enhanced. The industry’s survival status urgently needs improvement. The traditional fuel car market continues to shrink, with the penetration rate of new energy vehicles exceeding 55%. The industry ecosystem is undergoing restructuring, and the transformation to new energy has become a key factor in whether dealers can make a profit.
It is noted in the article that the loss ratio of traditional fuel car dealers in China this year has reached as high as 58.6%. Since 2019, the overall net profit margin of Chinese car dealers has dropped from 2% to 0% in 2024 and further to -2% this year, with many leading dealers also experiencing losses this year.
Cui Dongshu has urged relevant departments in China to promptly introduce phased financial relief policies, including conducting special investigations into the financial environment in the automobile dealership sector, and guiding financial institutions to increase support under the premise of controllable risks.