Chinese Auto Dealers Overhaul Channel Strategies in 2025, Accelerating Shift to New Energy

In 2025, China’s automobile dealership sector is undergoing profound restructuring, with traditional fuel-vehicle sales channels rapidly exiting the market. Leading dealership groups have shuttered 576 underperforming fuel-vehicle outlets this year while adding 920 new energy vehicle (NEV) and domestic-brand stores. Plagued by inverted new-car pricing, high inventory levels, and rising operating costs, fuel-vehicle operations continue to incur losses, with new-car gross margins plummeting to just 1.8%. Meanwhile, NEVs have surpassed a monthly market penetration rate of 60%, accelerating dealers’ pivot toward the NEV segment. Data shows that among China’s top 100 dealership groups in 2025, NEV outlets now account for 43% of total locations, with NEV sales reaching 2.03 million units—a 35.4% year-over-year increase—and overall NEV penetration exceeding 30%. Profit structures have shifted significantly: after-sales services, contributing only 9.5% of revenue, now generate 64.6% of gross profit, becoming the core earnings driver; used-car sales grew by 21.7% year-over-year with a gross margin of 5.8%, emerging as a new growth engine. New-car sales have essentially become a customer-acquisition tool rather than a primary profit source. To address industry challenges, leading dealerships are enhancing efficiency through stringent cost control and workforce optimization. Total headcount declined by 9.1% in 2025, while per-employee output remained steady at RMB 4.95 million. At the same time, customer attrition has worsened—impacted by the rise of NEV brands’ direct-sales models and dealers’ own operational shortcomings—leading to a decline in active customers and persistently rising customer acquisition costs.