At the start of 2026, data from the China Automobile Dealers Association (CADA) showed that the industry-wide gross profit margin on bare vehicles (GP1) plummeted to -21.5% in January, with luxury brands plunging even further to -26.2%, making losses on every vehicle sold the new norm. In February, the inventory warning index stood at 56.2%—slightly down but still high—with 76.8% of dealers failing to meet their sales targets. Nevertheless, 20.7% of dealers reported improved profitability. Their success hinged on three key strategies: pivoting to the new energy vehicle (NEV) segment (e.g., Zhongsheng and Yongda partnering with Harmony Intelligent Mobility), adopting leaner, cost-efficient store formats, and deepening after-sales services (e.g., Lincoln achieving an after-sales absorption rate exceeding 100%). On the policy front, the newly implemented "Guidelines for Compliant Pricing Practices in the Automotive Industry" are beginning to take effect, with 25.6% of dealers reporting some relief from price inversions. The industry is shifting away from the “volume-over-price” model toward refined operations, seeking new profit drivers through full-lifecycle services beyond new car sales.