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Chinese Automobile Distribution Industry Prospects

Report of Chinese Automobile Distribution Industry, 2012

After entered WTO in 2001, Chinese automobile industry has a rapid development. Since 2009, China has become the largest country in automobile producing and marketing globally. In 2011, the production and sales volume of Chinese automobile were separately 18.4189 million and 18.5051 million (new cars), and the growth rates were 0.84% and 2.45% respectively. The rapid increase of the production and sales volume of Chinese automobiles impels the rapid development of the automobile distribution industry. http://www.bharatbook.com/market-research-reports/automobiles-market-research-report/report-of-chinese-automobile-distribution-industry-2012.html

The sales models of Chinese automobiles can be divided into franchise stores for automobiles (1S-5S), automobile supermarkets, automobile exchange fairs, automobile zones, etc. These models have their own characteristics. By the end of 2011, distributors of Chinese automobiles have surpassed 60 thousand, and about 70% of them are operated in the form of retail stores. Among them, more than 10 thousand are 4S shops, increasing by over 1000 shops annually in China, whereas many 4S shops go bankrupt because of the poor operation. China has more than 500 new automobile exchange fairs and automobile zones, over 600 second-hand automobile trading fairs, and over 700 professional automobile fitting and accessory fairs. Due to the adjustment and impetus of market competition and city planning, Chinese automobile market has the tendency of centralized trading, and construction of large-scale automobile cities and zones is being carried forward in large and medium-sized cities with a favorable development momentum.

The market concentration rate of Chinese automobile circulation industry is increasing rapidly. In 2010, the number of distributors in Top 100 enterprises reached 3,000, accounting for 5% of the industry. However, the 5% distributors totally sold 3.8167 million vehicles, accounting for 21.13% in total sales nationwide. In China, the profit of many automobile distributors is even higher than some listed automobile manufacturers, most of which are distributors who operate the business of import of luxurious cars or the middle and high-end joint brands.

Automobile market in large cities of China is nearly in saturation, so automobile markets in small and medium-sized cities inevitably will have rapid development. For automobile distributors, it will be the key to the increase in the future automobile market. All the time, because of the emphasis on large cities and negligence on small and medium-sized markets by automobile manufacturers, sales channels in small and medium-sized markets are relatively few. The competition in small and medium-sized markets is not as fierce as that in first-tier cities. Meanwhile, land prices and rents in small and middle-sized cities are lower so the cost is lower accordingly.

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