In the first half of 2025, the domestic automobile distribution industry faced the dual challenges of intensified market competition and uneven pace of consumption recovery.
Data from the China Automobile Dealers Association shows that only 30.3% of dealers achieved their sales targets in the first half of the year, the loss ratio climbed to 52.6%, and 74.4% of dealers had price inversions to varying degrees. The industry has fallen into a dilemma of "sales volume increasing but revenue not increasing, revenue increasing but profits not increasing."
Against this backdrop, losses at several leading listed dealership groups have intensified, with performance diverging significantly. Overall, new energy business has become a key variable.
Dealer revenue and net profit all declined
Leading dealer Zhongsheng Holdings (00881.HK) achieved operating revenue of 77.322 billion yuan in the first half of this year, a year-on-year decrease of 6.2%, and net profit attributable to parent company shareholders of 1.011 billion yuan, a year-on-year decrease of 36%. This means that Zhongsheng Holdings, as the industry leader, is also facing significant market pressure and is not immune.
The decline in new car sales and the average selling price of new cars also dragged down the performance of the new car segment. In the first half of the year, its new car sales revenue was 57.931 billion yuan, a year-on-year decrease of 4.7%.
In the first half of this year, Zhongsheng Holdings sold 228,600 new vehicles, a year-on-year decrease of 1.7%. Luxury brands accounted for 62.3% of sales, with sales remaining virtually flat year-on-year. Furthermore, the company's focus on price for volume has led to a continuous decline in the average selling price of its new vehicles since 2024.
Dragged down by new car sales, Yongda Auto turned to losses.
According to Yongda Automobile's (03669.HK) 2025 interim report, the company achieved operating revenue of 27.072 billion yuan in the first half of the year, a year-on-year decrease of 12.8%; however, affected by the inverted prices of new cars and other factors, the net loss attributable to the parent company reached 3.33 billion yuan, and the net profit attributable to the parent company last year was 110 million yuan.
In terms of new vehicle sales, Yongda Auto sold 72,501 units in the first half of the year, a year-on-year decrease of 13.4%. Revenue from new vehicle sales and related services reached 20.532 billion yuan, accounting for 75.8% of total revenue, a year-on-year decrease of 14.4%. Its gross profit margin for new vehicle sales and related services was only 1.03%, a year-on-year decrease of 0.61 percentage points.
Luxury car dealer East Auto (01268.HK) announced its 2025 interim results, showing that the company's revenue in the first half of the year was 10.135 billion yuan, a year-on-year decrease of 4.9%; its net loss attributable to the parent was approximately 815 million yuan, an increase of nearly 30 times year-on-year, and its net loss in the interim period of 2024 was 27 million yuan.
East American Auto believes that the macroeconomic factors in the first half of 2025, the continued weakening of domestic consumption power, the imbalance in the supply and demand structure of passenger cars, and the increasingly fierce price war. It particularly points out that the impact of intensified competition and luxury car taxes on luxury cars has intensified.
Meidong Auto's performance also highlights the consequences of trading price for volume. In terms of new vehicle sales, while Meidong Auto's sales increased 7.8% year-on-year to 28,214 units in the first half of the year, fierce market competition led to a significant decline in unit prices, resulting in a 7.5% year-on-year decrease in new vehicle sales revenue to 7.93 billion yuan.
Dealers actively adjust their structure and switch to new energy vehicles
It is worth noting that after-sales service remains the "basic foundation" of profitability for major dealer groups, and new energy business has become a key growth engine for leading dealers.
Zhongsheng Holdings mentioned that with the adjustment of its brand structure, the AITO brand has contributed to its business for the first time, with sales of 11,000 new vehicles in the first half of the year, partially offsetting the decline of other brands. It also contributed to an increase of 0.6 percentage points in the group's overall new vehicle gross profit margin.
Yongda disclosed that in the first half of the year, sales of all its independent new energy vehicle brands reached 10,312 units, a significant year-on-year increase of 49%. Of these, 4,455 units were sold through dealerships and 5,857 units were sold through direct sales. By the end of June, the new energy vehicle brands had nearly 6,000 orders remaining, laying the foundation for growth in the second half of the year.
In the first half of the year, Yongda opened seven leading new energy vehicle stores, including five Hongmeng Intelligent Driving stores. It also secured authorization from 30 new energy vehicle brands and has 14 new energy vehicle stores under construction, 13 of which are Hongmeng Intelligent Driving stores. Of the 19 stores closed, merged, or transferred in the first half of the year, seven were new energy vehicle brands.
In the after-sales business, the contribution of new energy vehicles is also gradually increasing.
Yongda noted that its after-sales business performed robustly, with after-sales service revenue reaching 4.784 billion yuan in the first half of the year, including 4.660 billion yuan in repair and maintenance, essentially flat year-on-year. Of this, new energy vehicle repair revenue reached approximately 216 million yuan, a year-on-year increase of 75.8%. The average vehicle output value reached 3,447 yuan, a year-on-year increase of 16.5%, significantly outperforming the overall level.
Looking ahead to the second half of the year, dealer groups all expect that competition will be difficult to ease.
Yongda anticipates that while price competition will persist in the second half of the year, it also believes structural opportunities exist. First, the shift to electrification has become an unstoppable industry trend, offering new opportunities. Second, brands and networks continue to compete with each other, and choosing the right brand will ensure a smooth transition through the market. Furthermore, the vast aftermarket service opportunities offered by existing customers continue to grow.
Zhongsheng Holdings also emphasized that the Chinese auto market has shifted from a new car (incremental) market to a car ownership (stock) market. With the rapid development of new energy vehicles, OEMs are aggressively competing for market share at the expense of profits. After-sales service, driven by a strong customer base (stock ownership), has become the primary source of profit. They believe that as dealerships become increasingly competitive, car owners will increasingly favor leading groups like Zhongsheng.
