What are the factors that affect the decline in the profitability of the used car industry?

The industry profit margin has become a concern for the used car industry. Since the State Council's policy on the active use of the used car market has been introduced, the policy has been developing in the direction of good, and the used car market environment has also improved, and the profit rate of the used car industry has dropped. On November 1st, the China Automobile Dealers Association's monthly situation analysis meeting, the association's deputy secretary-general Shen Rong said that the profit margin of the used-car market dropped from 13% to 6%-7%.

The profit rate reflects to some extent the overall operating status and level of an industry. Shen Rong said: "From the perspective of our observation and market research feedback, the profit margin of the used car market has indeed declined."

What are the factors affecting the profitability of used cars?

The decline in profit margins should be said to be related to the development of the industry. Prior to this, many people's basic evaluation of the used car industry was "sold up." When the industry's profit rate was relatively high, it was not difficult to see that this high-margin and "sold" business environment is not No relationship. However, such an environment is unfavorable to consumers and the entire market, and the orientation to the development of the industry is negative.

Therefore, "information transparency" has gradually become a topic of discussion in the used car market. Why information should be transparent? The purpose is to return the profit level of the used car industry to a reasonable interval, which has played an important role in promoting the healthy development of the used car industry. In other words, the drop in profit margin to a reasonable range is an important normal performance of the used car market on the road to standardization.

Secondly, the operating scale of the used car industry was limited before, especially before 2010, the transaction of used cars was very fragmented and basically belonged to the “basket for sale”, which was mainly based on retail operations, but not scaled. The subject's participation. But recently, the used car industry has undergone changes. First, B2B has emerged, which has accelerated the circulation of the industry. Second, the scale of industry operations has progressed to some extent. This progress is reflected in two aspects. One is, The second-hand car dealers have changed from the original single-handed car brokerage company to the addition of second-hand car e-commerce operators and second-hand car operators, which are brand management companies, and the addition of new car dealers represented by 4S stores, making the industry Labor productivity is improving. The increase in labor productivity has objectively reduced the operating and service costs of the industry. As a result of the reduced cost, used cars have more room for price. The price level of used cars keeps falling, which is related to the supply and demand relationship in the market. The relationship between supply and demand changes, which makes the used car industry return to a rational range due to the unreasonable profit level formed by relying on information asymmetry and a certain monopoly in the past. . Therefore, changes in the market structure have led to a series of phenomena that ultimately affect the return of used car prices to normal and reasonable levels.

Past experience has given us a hint that today's new car market industry's profit margin has fallen from the previous 6%-7% to 1.9% or even lower. This is the result of the transition from the seller’s market to the buyer’s market, resulting in changes in the overall supply and demand relationship. In the field of used vehicles, although it is still the seller's market today, the level and scale of the seller's market have already been very different. The used car practitioners and related industry agencies are working hard to promote the market from the seller's market to the buyer's market. The decline in the industry's profit margins has returned to a rational interval. This is a normal reflection of the market. It is reasonable and reflects the maturity of the used car industry at a level.

Will used car profitability continue to decline?

Now used car employees have realized this, which can be confirmed by a phenomenon, that is, the used car industry began to pay more attention to the follow-up service follow-up service, and service follow-up has become everyone recognized, considered profit The main source of the used car profit is more dependent on the follow-up service rather than the transaction itself.

Shen Rong said: To a certain extent, China's used car market was ripened ahead of time. This ripening refers to the construction of profit margins and service systems. The objective market was forced to force everyone to do so. Because of the intensified competition in the market itself, and other related factors such as large-scale production, it is possible that the objective supply and demand relationship in the market changes, making the profit of the used car's overall operation return to a reasonable interval, becoming a possible and inevitable. This reasonable range does not have a particularly clear concept, but it is probably lower than the current 6-7%, because the used car industry is a service meal to some extent, whether it is dealers or service providers, all eat Service meal, what is the concept of service? Service must rely on the amount, is to rely on the profit level of relatively low units to maintain.

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