Auto Dealers’ Profits Sharply Narrow in 2025, Over Half in the Red—New Energy Vehicles Key to Breakthrough

In 2025, the profitability of domestic automotive dealerships deteriorated significantly, with the proportion of profitable dealers plummeting from 39.3% in 2024 to just 23.5%, while the share of loss-making dealers widened to 55.7%. Leading listed dealers such as Zhongsheng Holdings and Yongda Automotive swung from profit to loss, and Shanghai Wumao reported a sharp decline in its attributable net profit for the first three quarters. New vehicle sales continued to weigh heavily on overall gross margins, contributing negatively at -25.5%, making after-sales services the primary source of profit. Meanwhile, financial and insurance businesses saw shrinking margins due to adjustments in bank consumer finance policies. Only 44.3% of dealers met their annual sales targets, intensifying tensions with OEMs and driving dealer satisfaction to a historic low. Notably, new energy vehicle (NEV) operations stood out positively: nearly 5,000 new 4S stores were added in 2025, with NEV brands accounting for 56% of these additions, and NEV-focused dealers significantly outperforming the industry average. Although favorable policies are expected in 2026, the sector remains in a painful transition phase, prompting widespread caution among dealers.