·The test of the low growth rate era: Where is the way out for car dealers?

2015 is an important node for the Chinese auto industry. It is not only the closing year of the 12th Five-Year Plan, but also the key year for China's auto development.
However, multiple sets of data show that the current situation in China's auto market is not optimistic. According to statistics, in 2014, China's automobile sales reached 23.49 million units, a year-on-year increase of 6.9%. Due to the high growth base, the downward pressure on the domestic macroeconomic situation and the decline in the commercial vehicle market, the growth rate of domestic automobile sales in 2014 has dropped significantly, and the growth rate is lower than the industry expects 8% to 10%.
With the overall economic growth slowing down, the China Automobile Association predicts that the growth rate of China's auto market will be 7% in 2015, and will enter the "new normal" of low growth rate. This has led to a growing profit margin for auto dealers. In 2009, nearly 90% of dealers made a profit, and in 2014 this proportion fell to less than 30%.
At the end of last year, the dealers who were caught in the profit gates repeatedly reported that the “forced palace” manufacturers demanded subsidies. According to the statistics of the reporters, the subsidies granted to dealers by BMW, Mercedes-Benz, Audi and FAW Toyota last year have exceeded 10 billion yuan, reaching 11.45 billion yuan.
In addition, in order to survive in the fierce competition, car dealers have repeatedly offered tactics to reduce sales by price. Previously, Liu Zhifeng, executive vice president of Beijing Hyundai, once said, “The average transaction price of China's auto market last year was about 3%.”
The price of imported cars with relatively high prices is more obvious. According to data from the China Import Car Market Joint Conference, at the end of last year, the imported car market price approached the lowest point in history, and the profit margin reached 10.7%. Among them, the BMW 7 Series market has a profit margin of about 20%.
This phenomenon reflects the embarrassing situation that the auto dealers are in a dilemma when the growth rate of the Chinese auto market is slowing down. It is likely to become one of the hot topics in the auto industry of the two sessions this year. Behind this phenomenon, it also reflects the many loopholes and deficiencies of car dealers.
It is understood that the investment cost of building a 4S shop is at least 10 million yuan. The profit of a 4S shop for a manufacturer usually does not exceed 7%, and the monthly sales of a 4S shop is almost 10 million yuan to maintain a normal balance of payments. Looking at the car of about 100,000 yuan, that is to say, it is not a loss to sell 100 cars. This sales volume is easy for 4S stores with rich product lines and high brand awareness. However, for those new brands with a single product line, there is a lot of pressure to sell 100 cars per month. Blind expansion and repeated construction have further magnified the dilemma of these 4S stores under the weak market.
Faced with increasingly fierce competition, there are few dealers who truly get rid of price leverage and survive with unique characteristics. The homogenization of marketing model and the simplification of marketing methods have become common problems for auto dealers. Industry experts use less innovation and less change to summarize the status of dealer development in recent years. “The level of after-sales service and marketing level are far less than sales skills. The means of competition are still concentrated on price, and the development of the aftermarket is almost zero.”
The contradiction between car companies and dealers is also worthy of attention. In the downturn of the auto market, major automakers continue to increase their sales targets in order to seize market share. According to Shanghai Volkswagen's plan, this year's sales target is 2 million units, an increase of 16%, which is 4.10 percentage points higher than last year's increase. BMW’s sales plan in China this year is up 16%, which is in line with last year’s sales growth. This year, the sales volume of GAC Chuanqi is planned to be 160,000 units, and the sales volume will increase by 37%.
In the big environment and the big background of the downturn in the automobile market, how to achieve the contrarian trend is a problem that dealers must consider.

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