Long time no see! During the time of disappearance, the main package has been concentrating on learning business knowledge, and now it is finally ready to return to the update with a full of dry goods~ This time I will systematically organize the industry insights and practical experience I have learned into in-depth articles to share with you. Take a bow~
Part 1 Research Background and Overview
1. The development history of China’s automobile circulation system
China’s automobile circulation system has experienced an evolution process from unified purchase and distribution to marketization, from a large market to a 4S store, and from a dominant company to a hundred flowers from the planning and distribution model in the early days of the founding of the People’s Republic of China. From the early days of the founding of the People’s Republic of China to 1979, automobiles, as an important means of production, implemented a strict planning and distribution system, and individuals could not own cars. In 1988, the state took out 20,000 planned allocated cars and put them on the market and sold them at market prices, marking the beginning of the transition from planned control to the market as a commodity.
On March 26, 1999, Guangqi Honda’s first automobile special sales and service store opened, marking the official entry of the 4S store model on the stage of China’s automobile circulation industry. In the 20 years that followed, the 4S store model was a huge success in the Chinese auto market, with more than 30,000 4S stores in China at its peak. In 2005, the “Measures for the Administration of Automobile Brand Sales” was promulgated, which further determined the sales and service network with 4S stores as the main body, and the 4S model ushered in a golden period of development.
To achieve these three challenges, product managers will only continue to appreciate
Good product managers are very scarce, and product managers who understand users, business, and data are still in demand when they go out of the Internet. On the contrary, if you only do simple communication, inefficient execution, and shallow thinking, I am afraid that you will not be able to go through the torrent of the next 3-5 years.
View details >
However, as China’s auto market enters an era of micro-growth, the disadvantages of the 4S model are gradually emerging. Problems such as large investment, single operating brand, rigid service and insufficient innovative thinking are becoming increasingly prominent. In 2024, about 4,000 4S stores will be withdrawn from the network, Guanghui will be delisted, and many luxury brand 5S stores will be transformed or closed, and the traditional 4S store model will be challenged like never before. At the same time, the rise of new energy vehicles has accelerated the innovation of channel models, and a variety of new channel forms such as direct sales, agents, and hybrid models are exploring and moving forward in the market.
In 2025, China’s automobile circulation industry will enter the era of “leftovers” is king, and the polarization of operational capabilities will become more and more serious. According to survey data from the China Automobile Dealers Association, the proportion of auto dealers losing money in 2024 will be as high as 41.7%, 84.4% of dealers have varying degrees of price inversion, and 60.4% of dealers have price inversions of more than 15%. This series of data shows that the traditional channel model can no longer adapt to the new market environment, and change has become inevitable.
2. The driving factors of channel change in the past five years
Over the past five years, China’s automobile sales channels have undergone earth-shaking changes. This change is not driven by a single factor, but is the result of the interweaving of multiple factors. Let’s break down these key drivers:
2.1 The impact of the epidemic and the acceleration of digital transformation
The “black swan” of the epidemic has completely changed the rules of the game. The sudden epidemic in 2020 has made traditional 4S stores overwhelmed, and the number of dealers entering stores across the country in the first quarter of 2022 has been cut in half by 40%. At the time of life and death, car companies have to accelerate digital transformation. In just a few months, VR car viewing and live broadcast car sales have changed from a concept to a standard configuration, and more than 80% of mainstream car companies have launched digital showrooms. What’s even more amazing is that a live broadcast of a leading car company can bring a week of passenger traffic to traditional channels. This digital revolution is not temporary, and the industry’s digital investment will grow at an annual rate of 28% from 2020 to 2025, completely reshaping the car sales model.
2.2 The rise of new energy vehicles
The rise of new energy vehicles has brought about a channel revolution. The penetration rate of new energy soared from less than 6% in 2020 to 48% in 2025, and the new forces did not follow the traditional routine at all. Tesla has more than 500 directly-operated stores in China, and NIO has turned the showroom into a social space, and the ideal is to drive the car directly into the mall. These innovative models have an amazing effect: the efficiency of a single new energy store is 2.3 times that of traditional 4S stores, and the inventory turnover is 60% faster. More importantly, the OTA upgrade has reduced the frequency of after-sales store visits by 40%, completely shaking the business model of 4S stores that make money through after-sales.
2.3 Changes in consumer behavior
The proportion of Generation Z car purchases jumped from 18% to 46%, and the consumption habits of this group of Internet natives have left traditional dealers at a loss. According to the data, 87% of young people first complete price comparison and configuration selection online, and just go through the motions when they arrive at the store. They value digital experience 2.8 times more than previous generations of consumers, and 24×7 online response and transparent prices have become basic requirements. This change forces the channel to shift from “selling cars” to “services”.
2.4 The conflict between OEMs and dealers intensified
The manufacturer has to change. In 2025, the loss of traditional dealers will be as high as 58%, a sharp increase of 37 percentage points from five years ago. The overdue rate of inventory financing in the Yangtze River Delta region rose to 12.7%, forcing the dealer associations of the four regions to jointly speak out in July 2025 and put forward three major demands of “no pressure on the warehouse, no tying, and no forced store construction”. In the face of pressure, some car companies have begun to pilot the “channel partnership system” to reduce store construction costs by 40% and try to rebuild a healthy channel ecology.
2.5 Industry competition intensifies
Fierce market competition has become a catalyst for change, and market concentration has continued to decline, with the share of the top 10 car companies dropping from 60% to 48%. The new energy price war from 2023 to 2025 has caused car prices to fall by 15-25%, and channel efficiency has become a life-and-death line. Car companies have shown their skills: in third- and fourth-tier cities, the coverage rate of new energy channels has soared from 31% to 79% in three years; Mainstream brands have established independent new energy networks, forming a parallel network of “fuel + new energy”; Going overseas has become a new battlefield, and the number of overseas direct stores of independent brands has increased fivefold in five years.
These factors are intertwined and reinforced: the rise of new energy has not only changed the product structure, but also reshaped consumption habits; Digitalization not only copes with the impact of the epidemic, but also meets the needs of young customers. In this multi-dimensional and in-depth change, channel transformation has become the main battlefield of the strategic transformation of car companies, and whoever can’t keep up with the rhythm will be eliminated.
3. The main direction and trend of channel change
Over the past five years, China’s auto sales channels are undergoing a profound transformation. This change is not a simple channel adjustment, but an all-round reconstruction from concept to model, which is mainly reflected in the following five aspects:
3.1 Transformation from a single channel to a diversified channel
The situation of 4S stores dominating the world has been completely broken, and now a channel pattern of a hundred flowers has been formed. New forces such as Tesla and NIO took the lead in adopting the direct sales model to achieve price transparency and service unification through self-built channels; Supermarket experience stores have sprung up, integrating car display scenes into consumers’ daily life scenes, and the conversion rate is 30% higher than that of traditional 4S stores; E-commerce platforms have also developed from initial marketing gimmicks to important sales channels, and it is expected that the proportion of online orders will exceed 15% in 2025. This multi-channel parallel strategy allows car companies to cover different consumption scenarios and greatly improve market penetration.
3.2 Change from “production and sales” to “sales and production”
The traditional model of “production and sales” is being replaced by “sales and production”. New power brands generally adopt order-based production, and the factory schedules production after users place orders, which shortens the inventory turnover days by 60% compared with the traditional model. The application of big data technology allows car companies to accurately grasp market demand and guide production plans through user preference data collected by the APP, effectively reducing the generation of slow-moving models. Even traditional car companies such as Volkswagen and Toyota have begun to transform their production lines to improve flexible production capacity. This transformation not only reduces inventory pressure, but also frees car companies from the vicious circle of price wars.
3.3 Transformation from “asset-heavy” to “asset-light”
The 4S store model, which invests tens of millions of yuan at every turn, is being replaced by a more flexible asset-light strategy. The agency system has gradually emerged, dealers have changed to the role of service providers, and OEMs have control over pricing, and the Mercedes-Benz EQ series is a typical case. The shared showroom model is welcomed by second-tier new forces, and multiple brands share a display space, which greatly reduces the operating cost of a single store. The pop-up store model allows for short-term leasing of popular business district venues to obtain maximum exposure with minimal investment. The practice of a joint venture brand shows that after adopting an asset-light model, the investment in a single store is reduced by 40%, but the efficiency of customer reach is increased by 25%.
3.4 Transformation from “channel control” to “channel service”
The relationship between OEMs and dealers is undergoing qualitative changes, from the past “management control” to the current “win-win cooperation”. BMW has established a digital academy to systematically train dealers’ new media marketing capabilities; OEMs began to share user data with dealers to achieve accurate online and offline docking; Brands such as Great Wall Motors have also launched special financial support programs to help dealers alleviate financial pressure. SAIC-GM has included “dealer satisfaction” in the executive assessment index, which has made the entire channel system healthier and more dynamic.
3.5 Digital transformation becomes inevitable
Digital transformation has become an industry consensus. The new retail model that integrates online and offline is reshaping the automobile circulation system. Online channels have realized one-stop services for VR car viewing, live car sales, and APP car booking; The offline experience store focuses on test drives and delivery, although the area is 50% smaller than that of traditional 4S stores, but the floor efficiency is 3 times higher. More importantly, the user’s online behavior data is fully connected to the offline sales system, and sales consultants can understand the customer’s preferences and needs at the first time. The practice of a new power brand shows that through digital transformation, the conversion rate of its online retention to offline test drive has increased by 40%, which fully proves the value of digital transformation.
This channel change is far from over, but is accelerating. In the future, we may see 4S stores transform into comprehensive service centers, direct sales and agency models coexist for a long time, channels further sink to the county market, and Chinese channel models are replicated overseas. What is certain is that only car companies that actively embrace change can win the future in this channel revolution.
Next preview: Research and analysis of channel transformation of car companies – analysis of automobile sales channel model
