Core Insights - The automotive market in China is facing intensified competition, leading to increased pressure on dealers who are now seeking transformation and adaptation strategies [1][3][6] - The report indicates that the loss ratio among automotive dealers has risen to 52.6% in the first half of 2025, with new car gross profit contribution at -22.3% [5][6] - Dealers are increasingly focusing on after-sales services and financial products to enhance profitability, as traditional new car sales become less viable [7][9] Market Performance - Passenger car sales reached 10.901 million units in the first half of the year, reflecting a year-on-year growth of 10.8% [3] - Only 30.3% of automotive dealers met their sales targets, with 29% of dealers achieving less than 70% of their goals [3][4] - The satisfaction score among automotive dealers dropped significantly to 64.7 points, indicating a decline in overall dealer morale [4] Profitability Challenges - The report highlights that 74.4% of dealers experienced varying degrees of price inversion, with 43.6% facing price inversions exceeding 15% [5][6] - The increasing price inversion is eroding profit margins, pushing many dealers into a state of loss and liquidity challenges [6] Shift in Business Strategy - Dealers are pivoting towards after-sales and financial services, which contributed 63.8% and 36.2% to gross profit respectively, far exceeding the contribution from new car sales [7][8] - Some dealers are exploring additional services such as car washing and maintenance to enhance customer engagement and loyalty [8] New Energy Vehicle (NEV) Focus - The profitability ratio for independent NEV dealers stands at 42.9%, compared to 25.6% for traditional fuel vehicle dealers [9][10] - NEV dealers are benefiting from a significant market demand, with NEV retail sales reaching 5.468 million units, a 33.3% increase year-on-year [9] Brand Transformation - Traditional dealers are increasingly transitioning to sell NEV models, with some forming partnerships with NEV brands to adapt to market changes [10][11] - Major automotive groups are adjusting their brand portfolios to include more NEV options, reflecting a strategic shift in response to evolving consumer preferences [10]