2013 Deloitte China Auto Dealership Performance Study

Every year, Deloitte China's Auto Dealership service team conducts an annual survey on dealership performance aiming to examine China’s auto dealership industry from micro and macro perspectives, and to provide a glimpse into the industry trend and the macro economic climate in which the auto market operates. It also identifies major risks faced by dealers in their routine operations, and provides auto OEMs, dealer groups and independent dealers with recommendations on better performance in key areas.

Compared with the previous study, this report widened the research scope – expanding from luxury car and imported car dealers and dealer groups, to dealers, dealer groups and OEMs of various brands, including luxurious, volume, and homegrown brands. We conducted nearly 100 in-depth interviews with general managers of dealers, executives from auto groups and carmakers’ regional managers, and distributed a separate questionnaire. This study touches upon various aspects of auto dealers’ operations, including profitability, business models, cost management, and finances, and provides an interpretation of the corresponding risks.

The survey results indicate that, although China’s auto market has rebounded moderately, the overall growth is slowing down and competition is getting fiercer. The country’s after-sales market is far from mature. Profits on new car sales are stretched thinner and thinner by brutal price wars, making it harder for dealers to achieve a decent profitability. High inventory levels in 2013 have put a strain on dealers’ and dealership groups’ cash flow. And they may lead to a string of potential risks.