Under the general trend of falling vehicle sales and prices, the logic of making money in 4S stores has changed: 4S Group is no longer centered on the brand of the agent, but on customer service, and its autonomy will grow.
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"Selling one car loses another" is not an exaggeration, but a fact.
AC Auto recently took stock of the 2023 annual report of 9 major dealer groups.The gross profit of new cars has declined to varying degrees year on year, without exception.
This is enough to see the power of the "price war" in the auto market, which not only devours the profits of dealers, but also accelerates the reshuffle of the dealer system. Many 4S stores’ hopes for survival are pinned on the rebates of manufacturers.
This year’s "oil-electricity dispute" is even more fierce. New energy vehicles not only disrupt the price system of traditional cars, but also impact the joint venture brand camp that 4S stores rely on most.
In 2024, the overall situation of automobile dealers in China is not optimistic. Under the difficult situation, it is better than the listed automobile dealer group to adjust actively.
Zhongsheng Group has always been in the forefront of the industry in terms of revenue and net profit, and was once called by the media."the last light in the 4S era"Its two core financial data in 2023 are not optimistic year-on-year, which reflects the operational difficulty of the automobile circulation market.
But zhongsheng group’sAfter-sales business is still the most eye-catching "background color" in the annual report.In particular, the strong control of the accident car business is also considered by the industry to be the key to keeping the last light in the 4S era.
After-sales "background color": the after-sales gross profit of a single store is as high as 22 million.
In 2023, luxury car dealers had to jump into the deep pit of "price for quantity" under the atmosphere of "price drops and then falls".
As the largest distributor of Lexus and the second largest distributor of Mercedes-Benz in China, Zhongsheng Group had 420 dealerships by December 31, 2023, including 269 luxury brands and 151 mid-to high-end brands.
Even with such a strong brand, Zhongsheng Group’s net profit fell by 24% in 2023 when its revenue decreased slightly year-on-year.
In terms of the split structure, Zhongsheng Group’s main income is still obtained from the sales of new cars. In 2023, the revenue scale was about 140.2 billion yuan, a slight decrease year-on-year; However, the gross profit of new cars was only 1.058 billion yuan, down 74% year-on-year.
The gross profit margin of the new car is even bleak.From 2.7% to 0.8% in 2023.. This is also the first time since 2016 that the gross profit margin of Zhongsheng New Car has fallen below 1%.
It is becoming more and more difficult to make money from new cars, and the after-sales business has become the ballast stone of 4 S. This is also the "background color" of Zhongsheng Group.
There are two sets of data to prove it:
First, in 2023, Zhongsheng Group contributed 20.1 billion yuan in after-sales revenue (maintenance, repair and painting) and 9.3 billion yuan in after-sales gross profit, up by 15% and 24% respectively. The number of incoming plants increased from 6.72 million to 7.47 million.
Based on this data, Zhongsheng GroupThe after-sales gross profit of a single 4S shop is as high as 22 million yuan/year, and the output value of bicycles is 2691 yuan.
Second, from 2020 to 2023, Zhongsheng Group’s absorption rate of spare parts exceeded 100%, which is enough to show that Zhongsheng’s after-sales gross profit can cover the operating costs and reduce the operating risks of 4S stores under the background that new cars are difficult to make money.
In terms of revenue contribution alone, the gross profit contribution of Zhongsheng’s spare parts, maintenance packages and after-sales service,From 54.2% in 2017 to 65.7% in 2023.It is enough to see the importance of after-sales business in Zhongsheng Group.
Strong control of accident car business: building 100 car body panel and painting centers.
In the annual report of Zhongsheng Group, it was emphasized again."Three One Goals"：
That is, to build 100 brand car body panel and spray service centers; Double the output value of accident car maintenance business; Achieve a sales ratio of used cars to new cars of 1.0.
As of March this year, Zhongsheng Group has operated 20 Zhongsheng brand maintenance service centers in 15 cities, another 14 are under construction, and an additional 12 have been planned.
It is worth mentioning that Zhongsheng Group has optimized its weak brand 4S store.Five Nissan 4S stores have been converted into car body panel and painting centers.
AC Auto once explained in the article that Zhongsheng Group will build the largest accident car maintenance chain in China if the goal of 100 cars is achieved.
Generally speaking, the gross profit contribution of after-sales business of a 4S shop is close to 50%, and the accident car business can account for 60-70% of the gross profit pool of after-sales business.
In 2023, Zhongsheng Group’s after-sales (maintenance, repair and painting) gross profit was 9.3 billion yuan, accounting for more than 65.7% of the contribution. Based on the above data,The accident vehicle maintenance output value of Zhongsheng Group may exceed 5.4 billion yuan.. The annual report also revealed that the output value of accident vehicle maintenance increased by 14% year-on-year.
Under the hidden rule of premium for resources, accident car business has become one of the few strong businesses in 4 S. Behind Zhongsheng Group’s tightening of accident car business,There are two necessary conditions:
AC automobile columnist weiran made an inventory of the after-sales situation of Zhongsheng Group in his article:
As can be seen from the table, from 2019 to 2023, the number of factory returns of Zhongsheng Group increased slightly, the after-sales gross profit margin was relatively stable, and the average output value decreased, but the number of retained customers increased to 3.79 million; After-sales gross profit increased from 8.6 billion to 11.766 billion yuan.
Where does the growth source come from?
There is an answer in the financial report:In 2023, the number of new car customers of Zhongsheng Group was 501,500 units, down 3.6% year-on-year, while the number of retained customers increased by 7.1%, which means that most of the increase came from the increase in the number of customers who returned to the factory after sale.
In other words, the "customer unit price" is decreasing, and the number of incoming plants is increasing, indicating that Zhongsheng Group’s after-sales customer locking and customer recall capabilities are getting stronger.
In the annual report, Zhongsheng Group put forward that the ultimate goal is to become a localized automobile service brand, and non-Zhongsheng system owners can also renew their insurance, repair accident cars and wash beauty stickers through Zhongsheng.
To achieve this goal, "100 car body panel and spray centers" is a key link, which will become the main contact point for car owners of non-medium-rise systems and deeply bind insurance companies and customers.
It is certain that similar Zhongsheng Group will strengthen the management and control of the accident car business, or bring greater pressure to the repair shop.
Hold the last light of the 4S shop era?
Some people think that the prosperity of China’s automobile market is the prosperity of consumption, not the prosperity of capital.
Judging from the market value of the dealer group alone, Zhongsheng’s share price has turned sharply from the high point in mid-2021 to now.Lost 82% of its market value..
Obviously, the logic of making money for dealers has changed, and the core of business may have shifted from vehicle sales to after-sales service.
The adjustment made by Zhongsheng around the after-sales business also reflects the new trend of the dealer industry:4S Group no longer takes the brand of the agent as the center, but takes the customer service as the center, and holds the customer firmly in its hands, so its autonomy will grow.
With China’s automobile market entering the stock market from the incremental market, 4S Group has a large number of customers, and customer operation has become the key to its future success, for example, increasing the number of after-sales tickets and the output value of bicycles.
Moreover, Zhongsheng’s customers are mostly luxury car owners, who are able and willing to pay for high-value services. Based on this, Zhongsheng’s strategy in the after-sales field should be more radical.
It can be said,It will become the base for Zhongsheng Group to resist the decline of dealer industry by mainly operating luxury cars, holding the basic after-sales market and controlling the accident car business.
It is an indisputable fact that in the tide of electrification transformation, fuel vehicles are being subverted, and the four functions of 4S stores, including vehicle Sale, Spare part, after-sales Service and information Survey, are being dismantled by OEMs and independent after-sales enterprises. Reflected in the data, from 2020 to 2023, more than 8,000 4S stores withdrew from the network.
Whether Zhongsheng can keep the last light of the 4S shop era remains to be answered. To be sure, this will be a thorny road.