Wang Che: Dealerships to Focus on After-Sales Services in 2011

　　Editor's Notes: For China's auto industry, the year of 2010 has come to an end amid debates. From a broader perspective, China is adjusting its economic structure and stabilizing prices. As to the specific measures, purchase tax concession has been canceled and Beijing issued several policies to deal with traffic congestion. What about the prospect of China's auto market in 2011? People share different views. In order to sort out ideas and identify the forward direction, Sohu Auto and China Automobile Dealers Association jointly held the 2011 China's Automobile Market Trend Forum on December 31 of 2010. Following is the speech given by Wang Che, the Chief Editor of Auto Weely which is a section of Beijing Youth Daily.

　　Wang Che: As to the automobile dealerships in China, the ratio between profits of sales service and after-sale service is seventy percent to thirty percent. The medium level is forty percent to six percent or fifty percent to fifty percent. As to the newly-added dealerships, the ratio may be twenty percent to eighty percent or thirty percent to seventy percent. There are some uncertainties about the sales in 2011. Firstly, we have to wait to see whether the cost of buying cars will rise. Secondly, Beijing has launched car quota to counter gridlock and the plates will be awarded by be lottery. Therefore we have to wait to see whether consumers will pay extra fees.

　　There is still margin space for Beijing to ease traffic congestion. During the 12th Five-Year period, Beijing will reach the level of Euro V. Does it mean that the vehicles whose emission standard is lower than Euro III will become yellow-label cars? Therefore we can see that Beijing Municipal Government still has some measures. As to the profits of dealerships, I believe that dealerships will engage in a price war in the field of after-sales service. What will dealerships do in order to attract more consumers in the after-sales market? In recent years, dealerships depended on price wars to sell new vehicles, which is a negative signal. In 2011, dealerships will embrace mergers and acquisitions in Beijing's auto market. The price war is an important issue in the year of 2011. (Translator: Qinghua/Hanxin)

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