I. Market Overview
China’s automotive distribution market continues to grow in 2025, driven by rapid expansion in the new energy vehicle (NEV) sector. However, the fuel vehicle segment faces severe oversupply and declining demand, leading to intensified market competition and structural imbalances.
II. Key Challenges
- Severe Price Inversion: Fuel vehicle sales operate at a loss, with deeper losses correlated to higher sales volumes.
- Liquidity Crisis: Widespread cash flow deficits and tightening capital chains threaten dealer viability.
- Inventory Overhang: High inventory levels force dealers into distress sales to alleviate financial pressure.
- Profitability Erosion: New vehicle sales incur persistent losses, with even premium brands relying on financial services to maintain minimal margins.
III. Policy Recommendations
- Conduct comprehensive industry research to formulate targeted financing solutions for dealerships.
- Guide financial institutions to enhance credit support and implement flexible loan restructuring.
- Encourage policy banks to establish specialized credit programs and promote consumer auto loan incentives.
Urgent interim measures are required to stabilize the automotive distribution sector and ensure its sustainable development.
