It is now a fact without a doubt that China is losing pace as a booming economy and that the stock market crash a couple of months ago was only a warning of what can happen. While the whole of economy in China is not only slowing down but almost at a standstill, yet aided by the Chinese government in a tentative plus, all sales are plummeting and one of the most significant industries within China is ready for a big retooling.
It is an interesting curiosity that car dealers in China report that almost seventy per cent of all their revenue is due to new car sales and not from other business avenues associated with car dealership and related business ventures, such as car repairs, upgrades, auto finance such as leasing and so on. In the UK the revenue for sales of brand new cars amounts to only some five per cent and all the other money that trickles in comes from other income sources.
This anomaly in sales cannot be held up for much longer and Chinese car dealers must be instructed and guided in venturing into other avenues. This restructuring is going to be costly, hard and very slow. Until now the whole car business in China was pretty much a simple affair, people came with money, you sell them the car, the business is over. Everything else happened elsewhere or was not a part of the after sales service provided by the car dealer.
In the UK you cannot drive a car without an insurance and most, at least initial, insurance deals are handled by the original dealer, who – as a convenience – provides a key into the door service, where you purchase your car and come pick it up and drive away, or as close to such overall service as the dealer is able to get. In China it seems that the car insurance is not so much an imposed obligation as elsewhere and the insurance houses do completely separate business than the dealers, leaving that avenue of income outside of car dealers grasp. This is only one of the things that need to change, if car dealers want to manage to survive the upcoming restructuring necessity.
In China, car dealers have to learn how to approach clients with after sales services and how to provide competitively priced offers that will bring customers back, even after they have driven away with their new car. The auto industry in China is a relatively young industry, the car sales boom just started in the 21st century and there was no time to develop strategies and school after sales service staff to properly handle all the business opportunities that are common in more developed countries. The existing facilities and servicing staff are simply bad at their job and need not only advice, but proper schooling.
Many big brands have launched training courses in order to properly educate their respective car dealers how to deal with customers in after sales care and what entails any such service, how much can be charged for such services, and similar. Car dealers needed to hire plenty of new people, in order to facilitate the new management of after sales customer care and services, many of which yet need to be trained. The time will tell if this measure will help car dealers of China at least soften the drop in sales.