China’s continued price war and stagnating domestic sales has one big, undesired effect: unprofitable dealerships.
Citing data from the China Automobile Dealers Association (CADA), Automotive News reports that 56 percent of dealerships in China suffered losses in 2025, up from 42 percent in 2024.
Only 24 percent of retailers turned a profit last year, down from 38 percent in 2024.
Meanwhile, the share of dealerships breaking even was just under 21 percent, from around 19 percent the year before.
According to CADA, the on-going new car price war intensified competition, forcing 82 percent of dealerships to sell new cars at below wholesale prices.
The race to undercut rivals pushed down average gross margin of new car sold across dealerships to -26 percent in 2025 compared to -18 percent a year earlier.
And after regulators tightened the approval of car loans to ward off financial risks, the average gross margin from auto financing and insurance fell to 24 percent last year, compared to 38 percent in 2024.
Dealers also complained that car manufacturers have set new car sales targets that are too high for them to achieve. That, in turn, deprived them of year-end bonuses and incentives.
In 2025, only 44 percent of dealerships in China surveyed met carmakers’ sales targets, down from 48 percent in 2024.
The only bright spot? Spare parts and aftersales services, which generated an average gross margin of 81 percent, up from 62 percent a year earlier.
With the Chinese government now taxing sales of new energy vehicles (still half that of non-electrified vehicles), it has softened the overall market. New car sales in China dropped 19 percent year-on-year in the first two months of 2026. Demand for electrified products, meanwhile, plunged 26 percent.
Considering this, 45 percent of China’s new car dealers expect sales to contract in 2026, while 32 percent believe it will end the year flat.
Fire up china cars fanboys
ReplyDeleteChill ka muna, Mr "doesn't bother to read the article" haha
DeleteDid you not read the article? In the country china but never mentioned chinese car brands only. Brand featured by the way was toyota dealership in shanghai, lol!!!
DeleteMe when I can't read.
DeleteSo someone’s prediction could be right that some or maybe many of AC byd 77 dealerships here won’t be profitable. From Byd china to AC price mark up, from AC to dealerships another price mark up and finally dealerships price mark up.
ReplyDeleteIn some places I think need more dealerships pa nga (or at least service bays) because I recently learned na BYD dealerships (or at least the one in my province) will service ANY EV car regardless of brand.
DeleteTo people who rarely read the articles beyond the headline, click the link in the article and you'll see the main picture is that of a Toyota dealership.
ReplyDeleteThat should help people understand that it's not Chinese car brand dealerships alone suffering but ALL brands' dealerships are feeling the price war over there.
Someone already commented up there, lmao! They just saw china and thought of chinese brands only.
DeleteSeems like Chinese cars will be pricier soon. They have to thank government subsidies and making ng low quality cars that’s why they can price their cars way cheaper than most competitors. In the end, their products are disposable cars.
ReplyDeleteEvery car is disposable, or have you not been paying attention for the past several decades?
DeleteProve your point please.
DeleteToyota Revo, Mitsubishi adventure and Isuzu crosswind still up and running. Even the first generation Toyota tamaraw. Meanwhile the chery QQ’s matagal na ginawang tansan ng Coca Cola,
DeleteSurviorship bias tawag dyan. You don't see all the cars of the same models that have been junked. From what I know si Toyota may mga End-of-life facilities para mag junk ng mga cars nila. What you see left on the road are the exceptions not the rule.
DeleteDealers wont be profitable with PHEV/EV. Most dealers sustain their business with maintenance but EV/PHEV wont generate profit after selling the car due to low maintenance.
ReplyDeleteThis gets worse with the price war and will eventually result to closure of medium sized brands
So better buy the big china brands if you’re really interested in china cars
During the start of the price war a lot of explanation articles and videos came out saying that the biggest reason for dropping prices is because the Chinese are naturally not big spenders and it takes a lot to convince them it's worth buying a high price item like a car.
DeleteChina the number one in vehicle sales worldwide
DeletePHEVs are anything but low-maintenance.
DeleteThe bad rep of PHEVs online are mostly based on US made (and US available only) PHEVs na hindi nila ni-seryoso ang build quality (parang compliance vehicles yung history nila dun). You don't see the same sentiments in places like Europe na getting popular na din ang PHEVs.
DeleteHow long do you think a china brand car will be worthwhile to keep using? Japanese cars on average I think its about 15 years.
ReplyDelete5 years? China cars won't depreciate a lot for they're already way cheaper. But when buying a Chinese car, you don't really care about resale value.
DeleteAfter the warranty it’s all over. Repair and maintenance will be high and stressful. Engine and transmission boom, spare parts will take eternity to arrive.
DeleteYung Chinese copycat parts na nga nagpapamura ng repairs ng Japanese brands at parang wala nmn reklamo mga nag pa repair gamit nun. Why do people think it won't be the same for Chinese cars?
DeleteThe dealerships are Japanese, German and American Car
ReplyDelete