Gasgoo Munich- In 2025, China’s auto dealership sector underwent a profound and unprecedented restructuring.On one side, dealers face inverted pricing, bloated inventories, and crushing operating costs. On the other, the monthly penetration rate of new energy vehicles (NEVs) topped 60% for the first time, accelerating a radical overhaul of the sales channel structure".On May 27, at the 2026 China Auto Dealer Conference, Wen Sijing, deputy secretary-general of the China Automobile Dealers Association, offered an in-depth reading of the "2026 China Auto Dealer Development Report." She dissected the trends and characteristics of the "Top 100 Dealer Groups" across dimensions including scale, network structure, profitability, operational efficiency, and customer management.She noted that 2025 marks year one of the industry’s reconstruction. The traditional model—relying on new car volume and manufacturer rebates—has collapsed. Going forward, only those that transform from "vehicle sellers" into "full-lifecycle service providers" will survive.A Shift in Channel FocusLooking at the scale and network structure of the leading dealer groups, a clear trend emerges: active downsizing to improve quality and structural optimization.Data shared by Wen shows that total revenue for the Top 100 groups fell 8.8% in 2025, while asset investment dropped 13.3%. This indicates that most groups are actively pulling back from traditional heavy-asset investments to explore asset-light NEV models.An even more critical shift lies in the network’s "addition and subtraction".Over the past year, the Top 100 opened 920 new outlets, primarily focused on NEVs and domestic brands, while shuttering 576 points of sale—mostly inefficient internal combustion engine brands. NEV outlets now account for 43% of the Top 100’s network, approaching half the total.This channel overhaul drove annual NEV sales for the Top 100 to 2.03 million units—a 35.4% surge that pushed their penetration rate past 30%.Image Source: Gasgoo AutoYet, more concerning than the drop in new car sales is the decline in after-sales service visits.The rapid rise of NEVs is rewriting the logic of after-sales profitability. With simpler mechanical structures, NEVs require significantly less maintenance than internal combustion vehicles—posing a fundamental challenge to dealers that have long relied on service departments to ride out market cycles.In terms of profit structure, new car sales still generate 74.9% of total revenue, yet contribute only 27.9% of gross profit. Meanwhile, after-sales accounts for just 9.5% of revenue but contributes a hefty 64.6% of gross profit.By 2025, the gross margin on new cars for the Top 100 had slumped to 1.8%—barely breaking even or worse. In contrast, after-sales margins held steady around 41%, standing as the sole "ballast" for profits.Today, new car sales have devolved into little more than a tool for generating traffic, ceasing to be a profit center.The sole bright spot is the used car business. Boosted by trade-in policies", the Top 100 moved 1.7 million used vehicles in 2025—a 21.7% annual jump. With a gross margin of 5.8%, profitability slipped slightly but remains far above that of new cars.The message is clear: only by positioning after-sales as a core strategy and refining used car operations can dealers offset the persistent losses in new car sales.The Challenge of Efficiency and RetentionFacing a market downturn and squeezed revenue, leading dealer groups haven’t sat idle. Instead, they are carving out survival space through aggressive cost controls, staff optimization, and efficiency gains.According to data shared by Wen, the selling and administrative expense ratio for the Top 100 edged up to 5.3% in 2025, while the financial expense ratio dipped slightly to 0.4%, indicating steady overall cost control.Even more striking is the rise in personnel efficiency. Total headcount fell 9.1% year-on-year, but the total payroll dropped 28.6%—more than triple the rate of staff reduction. Despite an 8.9% decline in revenue per store, extreme efficiency measures kept per capita output at 4.95 million yuan, actually surpassing 2021 levels. At the same time, the number of vehicles handled per sales and service advisor continues to climb steadily.Yet one set of figures should sound alarms across the industry: in 2025, both the customer base and the number of active customers declined.Wen argues this deserves more attention than inverted car prices. The exodus of large dealerships, the impact of the direct-sales model used by NEV makers, and dealers' own shortcomings in customer management have all driven this churn.While many groups have made strides in digitalization and new media, a bias toward acquiring new customers at the expense of retention persists. The result is a costly cycle: spending heavily to buy traffic while losing existing customers in droves.As more dealers flood into new media channels, traffic costs are climbing annually. Without solving retention, acquisition costs will soon swallow a large chunk of profits. The core of digitalization should not just be selling new cars and acquiring leads—it must serve the operation of the customer’s full lifecycle.In summary, profitable groups have pivoted from single-source sales to coordinated multi-business profitability, driven by strong after-sales customer operations, end-to-end used car capabilities, speed in NEV transition, and refined management. The common thread among loss-making groups is a systemic deficit in new car sales, a singular profit structure, and an incomplete transition to NEVs.Wen suggests that in the short term, dealers should prioritize slimming down assets and using digital tools to cut costs and improve cash flow. Mid-term, the focus must shift to growth in after-sales and used cars. Long-term, they must forge second and third growth curves through NEV transition and global expansion.Take Harmony Auto as an example: with 193 outlets across 25 countries, it has effectively hedged single-market risk by growing alongside Chinese NEV brands.Over the next three to five years, only those dealers that preserve cash flow, rebuild their profit models, embrace NEVs, deepen user services, and complete their digital transformation will survive the fierce competition ahead.