No One Cares About the Plight of Car Dealers

The first wave of car dealership bankruptcies in 2026 has arrived! 180 4S stores are affected, and salespeople unable to sell cars are going home for the Lunar New Year early.

As the lunar year draws to a close and the festive atmosphere of the Spring Festival intensifies, it should have been a critical period for auto dealers to push for year-end sales targets; however, many 4S dealerships now appear exceptionally deserted.

The exhibition hall lacked its usual bustling crowds, most of the negotiation areas were empty, and more noticeable were the personal belongings piled up on the workstations – many sales consultants had already packed their bags and returned home for the Chinese New Year.

This scene is not an isolated case. The phenomenon of "salespeople taking early holidays" has become widespread in automotive business districts across the country, reflecting the chill in the car market at the beginning of 2026 and the survival difficulties of dealerships.

A deep dive into the root causes of sales professionals returning home early reveals that policy changes and a wait-and-see attitude triggered by overspending are the primary factors. By the end of 2025, a large number of consumers rushed to buy cars to catch the last train of the purchase tax exemption policy, directly exhausting market demand for early 2026.

As 2026 approached, the vehicle purchase tax policy shifted from full exemption to a 50% reduction, a contraction in benefits that deterred some potential consumers.

More crucially, the car purchase subsidy policy officially expires in 2025, while the subsidy policy for 2026 has not yet been fully implemented, creating a clear policy gap.

"The most frequent question customers ask when they come in is 'When will the new subsidies be released?' If there's no clear news, they just turn around and leave, not even discussing car models or configurations with you," said a sales consultant from a joint-venture brand in Guangzhou in an interview with "Automotive Community." "I haven't sold a single car this month. My base salary is just enough to get by. Instead of wasting time at the dealership, I might as well go home and celebrate the New Year early and save some rent."

For most average consumers, car purchase subsidies and purchase tax incentives are crucial factors in their decision-making. The uncertainty surrounding these policies has led them to postpone their purchase plans, with a "wait-and-see" approach becoming the dominant mindset. This sluggish demand has directly resulted in a decline in sales performance. Consequently, many sales personnel, unable to meet their targets or secure year-end bonuses, have opted to return to their hometowns early, waiting for the market to recover after the Lunar New Year.

Another car salesperson working in Shanghai who has already returned to his hometown also complained to *Automotive Public*: "A few years ago at this time, I would receive more than a dozen customers a day and be busy until eight or nine in the evening. This year, I can't even get three groups a day. If I don't meet my performance targets, there's no year-end bonus. Staying at the dealership is just a waste of time, so I might as well head home early to be with my family."

According to several dealership managers, sales have significantly declined year-on-year since January this year, with some salespeople not making a single sale for the entire month. Taking early holidays has become an unavoidable measure.

The predicament of distributors continues.

The early return home of salespersons reveals the existential anxiety of the entire car dealership group. The year 2026 began with a seemingly accelerated rate of attrition in the automotive retail industry, presenting a situation where "top brands are struggling to bear the pressure, while mid-tier and lower brands are finding it difficult to move forward."

In this "trial," leading brands, leveraging their brand power and financial strength, maintained market share by engaging in intense price wars. Although profit margins were squeezed, they managed to stay afloat. For instance, some leading new energy vehicle brands have, since the beginning of the year, successively introduced discounts of tens of thousands of yuan and trade-in subsidies, with the terminal transaction prices of some models dropping by 20% compared to their official guide prices. By utilizing price advantages, they stabilized their core business. While their dealerships struggled with profitability, they at least avoided the risk of closure.

In stark contrast, more often we see the side of dealers struggling to survive.

According to incomplete statistics, in 2025 alone, 5 major dealer groups experienced cash flow problems, and 9 groups had their store authorizations revoked by OEMs. During the same period, the loss ratio of hypermarkets reached as high as 52.6%.

"Automotive Commune" in its article...With 12 dealerships closing every day, the "unscrupulous dealers" in your eyes are trekking through a torrential storm.The article "" once detailed the difficult survival situation of car dealerships.

"These dealerships suffer from weak brand power and insufficient product competitiveness, leading to consistently low sales. Many stores have been operating at a loss for months." A sales representative from a traditional gasoline car dealership in Shanghai lamented, "I used to think selling cars was profitable, but now I realize you can actually lose money selling them. We sell a car for 150,000 yuan, and the store next door directly cuts the price by 12,000 yuan. We have to follow suit, or all the customers will run away. Now, we lose more than 8,000 yuan for every car we sell, relying entirely on after-sales service to make up the difference, but even after-sales can't cover such a large loss."

Even formerly stable regional leading distributors are now falling into crisis one after another.

In the first ten days of 2026, two major automotive dealership groups, Tongyuan Group, the largest in western China, and Dong'an Holdings Group, a long-established leader in Henan, successively experienced financial troubles. This incident affected over 180 4S stores nationwide, with luxury car brands being the hardest hit.

Ranked 12th among the top 100 dealer groups, Tongyuan Group, with over 140 outlets, has been plagued with problems since August 2025, with multiple luxury brand dealerships in various locations facing delivery stalemates. Henan Dong'an Holding Group, with over 40 subsidiaries, experienced a crisis in an extreme form of "overnight emptying." Zhengzhou Zhongyuan Porsche Center, as the largest Porsche authorized dealer in Henan, was the first to shut down, followed by the loss of contact with dealerships of multiple brands, with a random verification showing an abnormality rate of over 50% in store phone numbers.

It is worth noting that the channel contraction strategies of upstream OEMs have further exacerbated the difficulties faced by dealers. The President of Porsche China explicitly stated that by the end of 2026, the number of sales outlets in the Chinese market will be streamlined from the current approximately 150 to 80, a reduction of 46.7%.

This aggressive channel optimization instantly turned the advantages of dealers relying on single-brand authorization into risks. For example, Tongyuan and Dongan Groups suffered heavy losses when OEMs contracted their channels, precisely because they focused on luxury brand authorization.

Consequently, with the year-end approaching, the combination of already weak market demand and the operational struggles of dealers has led many stores to simply arrange for sales staff to take leave early to save on labor costs. This has made the phenomenon of "sales staff returning home early" increasingly common.

A salesperson from a missing dealer's store in Henan told "Auto Commune" in a phone interview: "The company is on the verge of collapse. The boss told us to take a leave of absence, and we'll see if we can return to work after the New Year. It's uncertain if we'll even be called back."

Data shows that from 2021 to 2025, nearly 15,000 4S stores in China have withdrawn or closed down, and the total number of 4S stores has been in negative growth for two consecutive years. The dealer default wave at the beginning of 2026 has further intensified the industry shakeout.

Sources of Weak Demand and Glimmers of Recovery

The core reason for the current sluggish car sales and the difficulties faced by dealerships lies in the sustained weakness of the demand side, a phenomenon influenced by a confluence of multiple factors.

First, the impact of the decline and gap period of car purchase subsidy policies.

Following the expiration of the 2025 car purchase subsidy policy, the new round of subsidy policy for 2026 has not yet been fully issued. Although Guangdong and other regions have recently taken the lead in introducing car replacement and upgrade subsidies, offering up to 15,000 yuan for replacing with new energy vehicles and up to 13,000 yuan for gasoline vehicles, a nationwide subsidy policy has not yet been implemented, failing to create a comprehensive market stimulus effect.

For consumers, the uncertainty surrounding subsidy policies has fostered a "wait-and-see" attitude; particularly against the backdrop of rising vehicle purchase costs, this hesitant sentiment is becoming increasingly prevalent.

Secondly, the adjustment of the vehicle purchase tax policy led to the premature consumption of future demand.

By the end of 2025, consumers rushed to purchase vehicles to take advantage of the expiring purchase tax exemption, significantly depleting market demand for early 2026. Data shows that domestic passenger car sales in December 2025 increased by 23% year-on-year. However, the market cooled rapidly in January 2026, with car purchases in the first week after New Year's Day decreasing by one-third compared to the same period last year, and dealership foot traffic dropping significantly.

Furthermore, economic uncertainty has dampened consumers' willingness to purchase vehicles. With unclear income expectations, many families are choosing to postpone significant expenditures, and automobiles, as non-essential and high-value goods, naturally become a consumption item to be reduced.

However, this does not mean that there is no hope for a recovery in the auto market.

Recently, many regions have started to implement a new round of car purchase subsidy policies. In addition to Guangdong, provinces such as Jiangsu and Zhejiang are also formulating local policies to stimulate automobile consumption, and the introduction of national subsidy policies has also been put on the agenda.

According to market feedback, local subsidy policies have begun to take effect. After Guangdong's "Guangdong Refresh" auto trade-in subsidy policy was launched, many dealers indicated that inquiries have increased, and some stores have seen transaction volume rise compared to before the policy was implemented.

Data shows that from January 12-17, domestic new energy passenger vehicle retail sales increased by 41.8% year-on-year and by 9.5% month-on-month compared to December, reversing the sluggish trend of "38% year-on-year decrease and 67% month-on-month decrease" at the beginning of the month. Market recovery signals have begun to emerge.

Therefore, looking ahead to the automotive dealership market in 2026, industry consolidation will continue, but with the full implementation of a new round of car purchase subsidy policies and the gradual release of consumer wait-and-see sentiment, the market is expected to see a substantial rebound in the second quarter.

For dealers, 2026 will be a critical year for transformation and survival. The model of over-reliance on single-brand authorization is no longer sustainable, and expanding into new energy brands and developing value-added after-sales services will be key to breaking through.

Leading dealerships need to accelerate their multi-brand to reduce reliance on a single OEM, while mid-to-lower tier dealerships should pinpoint their niche market positioning or transform into comprehensive automotive service providers, breaking away from their sole dependence on new car sales.

Overall, the automotive dealership industry will still face challenges in 2026, but after eliminating outdated capacity and optimizing channel structures, the industry will usher in a healthier development pattern. Only those dealerships that can adapt to change and grasp consumer demand will have the opportunity to gain a foothold in the new round of industry transformation.

And these salespeople who celebrated the New Year early this year will have the opportunity to be busy again before the next Spring Festival.