China’s Traditional Car Dealers Face Existential Threat from Ecommerce and Price Wars
China's automotive retail landscape is undergoing a seismic shift as traditional dealerships grapple with mounting losses. The convergence of aggressive online sales platforms and brutal price wars has pushed dealer margins to breaking point. Sales among major dealership groups plummeted 10% in H1 2025 after an 18% collapse in 2024—a decline that now shows signs of structural permanence.
The China Passenger Car Association reveals a sector in distress, with most dealers operating at significant losses. 'Positive cash FLOW has become impossible for many,' says CPCA General Secretary Cui Dongshu. This crisis stems from automakers' accelerating pivot toward direct-to-consumer models and digital platforms, leaving conventional sales channels obsolete.
Financing constraints and inventory pileups compound the problem. As ecommerce giants redefine car buying habits, dealerships face an existential question: adapt or perish. The price war raging among manufacturers has become the final straw—compressing margins beyond sustainability for traditional retailers.
