China Auto Dealers Sink Deeper Into Losses Amid Brutal Price War
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An auto dealer introduces vehicles to shoppers in Shanghai. Photo: VCG
More than half of auto dealers in China operated at a loss in 2025, as intense competition forced them to sell vehicles below cost.
The China Automobile Dealers Association said in a report that 55.7% of dealerships lost money last year, up 14 percentage points from 2024. Only 44.3% of dealers met their annual sales targets, down 3.9 percentage points year on year.
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- In 2025, 55.7% of Chinese auto dealerships operated at a loss, with only 44.3% meeting sales targets, due to price wars and tighter regulations.
- Domestic passenger-vehicle sales rose 6.4% to 24.1 million, but average new-car sales losses widened to 25.5%.
- Major dealerships posted large losses, prompting shifts to new-energy vehicles and overseas sales to mitigate declining profit margins.
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Who’s Who
- Zhongsheng Group Holdings Ltd.
- Zhongsheng Group Holdings Ltd., China's top-ranked auto dealer, projected a net loss of up to 2 billion yuan ($290 million) for 2025. This significant loss contrasts sharply with its 3.2 billion yuan net profit in 2024, highlighting the severe financial strain experienced by major players in the Chinese auto retail market due to intense competition and regulatory changes.
- China Yongda Automobiles Services Holdings Ltd.
- China Yongda Automobiles Services Holdings Ltd., the second-largest dealer, expects a 2025 net loss between 300 million and 330 million yuan, a significant drop from its 2024 profit of 280 million yuan. This financial downturn is attributed to intense competition and shrinking profits within the automotive retail sector.
- China Harmony Auto Holding Ltd.
- China Harmony Auto Holding Ltd., a significant overseas sales partner for BYD Co. Ltd., reported that Hong Kong and international markets comprised 51.3% of its total sales volume in the first half of 2025. This focus helped reduce its first-half net loss to 11.8 million yuan. Analysts project the company will achieve full-year profitability, driven by its overseas expansion.
- BYD Co. Ltd.
- BYD Co. Ltd. is mentioned in the context of its major overseas sales partner, China Harmony Auto Holding Ltd. This partnership has been crucial for China Harmony Auto to navigate the challenging domestic market. Overseas markets, particularly Hong Kong, accounted for a significant portion of China Harmony Auto's sales in the first half of 2025, helping it narrow losses and potentially achieve full-year profitability.
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What Happened When
- 2024：
- 55.7% of Chinese auto dealerships operated at a loss in 2025, up 14 percentage points from 2024.
- 2024：
- Only 44.3% of dealers met their annual sales targets in 2025, down 3.9 percentage points from 2024.
- 2024：
- Zhongsheng Group Holdings Ltd. reported a net profit of 3.2 billion yuan for the year.
- 2024：
- China Yongda Automobiles Services Holdings Ltd. reported a profit of 280 million yuan.
- First half of 2025：
- China Harmony Auto Holding Ltd. reported that Hong Kong and overseas markets accounted for 51.3% of its total sales volume. The company narrowed its first-half net loss to 11.8 million yuan, supported by a 2.8 million yuan profit from external markets, and revenue for the period jumped fivefold to 3.9 billion yuan.
- By June 2025：
- Regulators halted standard high-interest loan practices that paid dealers up to 15% commissions.
- Fourth quarter of 2025：
- Regional trade-in subsidies were depleted early.
- 2025：
- 55.7% of auto dealerships in China operated at a loss; only 44.3% of dealers met their annual sales targets; average losses in new-car sales widened 7.8 percentage points to 25.5%; domestic passenger-vehicle sales rose 6.4% to 24.1 million units.
- 2025：
- 81.9% of dealerships experienced “price inversion”; more than half reported an inverse pricing gap exceeding 15%.
- 2025：
- The contribution of finance and insurance to dealers’ gross profits fell 14 percentage points year on year to 24.3%.
- 2025：
- Zhongsheng Group Holdings Ltd. forecast a net loss of up to 2 billion yuan for the year.
- 2025：
- China Yongda Automobiles Services Holdings Ltd. issued a profit warning, forecasting a net loss of 300-330 million yuan.
- As of March 13, 2026：
- Zhongsheng Group Holdings Ltd. announced its 2025 performance and loss forecast.
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