ZHONGSHENG HLDG(HK:00881) Sou Hu Cai Jing·2026-01-14 03:06Core Viewpoint - The automotive dealership industry is experiencing a severe crisis, with numerous groups facing operational difficulties and closures, leading to a significant reshaping of the market landscape [2][5][19]. Group 1: Current State of Dealerships - In early 2026, two 4S groups, Dong'an Holdings and Tongyuan Group, reported operational failures, with multiple stores unable to deliver vehicles [2]. - In 2025, five large dealership groups experienced financial breakdowns, and nine groups had their store authorizations revoked by manufacturers [3]. - A total of 1,000 dealerships are expected to adjust their operations or exit the market due to financial issues [5]. Group 2: Financial Performance and Valuation - The average valuation of a single 4S store has dropped to approximately 16 million, reflecting a significant decline in dealership values [6][8]. - In 2024, the average price for transferring 4S stores was around 17 million, compared to previous years where values reached billions [10]. - The financial strain on dealerships is exacerbated by reduced customer traffic and shrinking demand, with nearly half of the dealers expected to meet only 90% of their sales targets in 2025 [11]. Group 3: Market Dynamics and Strategies - The market is witnessing a "stronger survive" trend, with leading groups like Zhongsheng expanding while others are forced to close or sell stores [5][19]. - Zhongsheng opened 50 new stores in 2025, strategically acquiring locations from struggling groups, thereby enhancing its market presence [5][12]. - The industry is seeing a shift towards optimizing brand structures, with some groups opting to sell underperforming stores to focus on more profitable ventures [15][19]. Group 4: Competitive Landscape - The automotive market is entering a price war, with significant discounts announced by major manufacturers, further squeezing dealership profits [16]. - The competition is intensifying, particularly in the electric vehicle sector, leading to uncertainty for traditional fuel vehicle dealerships [17]. - The industry is undergoing a profound transformation, with a focus on local market control and customer lifecycle management becoming critical for survival [19].