Chinese Auto Dealers Fall Short of First-Half Sales Amid Intense Competition

Only 12 percent of automotive dealerships in China reached their sales goals during the first half of this year, illustrating the increasing challenges faced by the world’s largest auto market amid rising competition.

The sector’s financial stability has declined further. According to the latest survey from the China Automobile Dealers Association, the percentage of dealerships turning a profit dropped to below 24 percent in 2025, down from more than 39 percent the previous year. Approximately 20 percent of dealerships break even, while more than half are operating at a loss.

“The last two years have been incredibly tough for auto dealers,” said Wen Sijing, deputy secretary-general of the China Automobile Dealers Association, during the 2026 China Auto Dealers Development Forum. “Auto prices are unstable, inventory levels are extremely high, capital is tied up, and costs for rent, labor, and operations remain elevated. Additionally, automakers’ performance targets have added even more pressure.”

The challenging environment is prompting dealerships to take drastic steps. It’s been reported that a major auto retail group recently informed employees that, following significant losses in the second quarter, it will suspend July salaries for managerial and senior staff, while employees below the management level at headquarters will receive 70 percent of their usual pay.

The notice explained that the retailer’s losses in the second quarter were so severe that investors could no longer support payroll expenses through borrowed funds.

Industry insiders noted that auto dealers are accelerating their transition. Large dealership chains are increasing the number of outlets dedicated to new energy vehicles to over 40 percent, while closing underperforming traditional fuel car dealerships. They’re also shifting focus from relying mainly on new car sales to generating diversified revenue, such as after-sales services, customer relationship management, and used-car operations. Conversely, dealer groups that are losing money tend to still rely heavily on new car sales.