Dealers Under Pressure as 4S Sales Staff Return Home Early, Auto Market Slumps at Year-Start

In early 2026, car dealerships across many regions of China saw drastically reduced foot traffic, with numerous sales consultants already packing up and returning home for the Lunar New Year ahead of schedule. Market demand at the beginning of the year was severely depleted due to the expiration of the purchase tax exemption policy and the phasing out of vehicle purchase subsidies at the end of 2025. Coupled with the fact that new subsidy policies had not yet been fully implemented, consumers widely adopted a wait-and-see approach. January’s auto sales plummeted year-over-year, with some dealerships recording zero transactions for the entire month. Facing no sales commissions and no year-end bonuses, many sales staff chose to leave their posts early. Meanwhile, dealership survival pressures intensified. In 2025 alone, five major dealership groups experienced cash flow breakdowns, and over half of all dealers reported losses. Leading brands managed to maintain relative stability through aggressive price wars, while mid-tier and smaller brands struggled immensely. Regional leaders such as Tongyuan Group and Dong’an Holdings faced successive defaults, affecting more than 180 outlets. Further compounding the crisis, automakers began scaling back their dealership networks—Porsche, for instance, plans to shutter nearly half of its outlets—dealing an additional blow to dealers reliant on single-brand franchises. However, provinces like Guangdong and Jiangsu have already rolled out a new round of trade-in subsidies. By mid-to-late January, new energy vehicle (NEV) sales showed a clear month-over-month rebound, suggesting the market could recover by the second quarter. As industry consolidation accelerates, dealers urgently need to transform their business models to break through the current impasse.