Responding to Changes in the Automotive Market, BMW, Toyota, and Ford Launch Channel Revolution

Recently, traditional automotive giants such as BMW, Toyota, and Ford have sparked a revolution in distribution channels: BMW officially announced that it will abandon the traditional 4S model as early as 2027; Toyota launched "North-South model sales in the same store," allowing the Camry and Avalon to compete on the same stage; Ford established a wholly-owned sales company to accelerate vertical integration.

This transformation is in fierce contrast to the aggressive offensive of domestic brands. As of June, there are over 290 user centers for the AITO brand and over 160 user centers for the Hongmeng Zhixing brand nationwide, in addition to more than 710 experience centers. BYD plans to add 800 new stores by 2025, with 70% located in third- and fourth-tier cities and county markets. This also means that as channel efficiency becomes a matter of survival, this transformation, which concerns the discourse power of the automotive market for the next decade, has entered a countdown stage.

The Necessity and Diversity of Channel Transformation

Currently, the channel transformation in China's automotive market has moved from exploratory reform to substantial advancement. The driving force behind this change stems from fundamental shifts in the market environment. On one hand, the rapid popularization of new energy vehicles has altered consumers' car-buying habits and expectations, making direct sales, transparent pricing, and personalized services new competitive focal points. On the other hand, domestic brands, with more flexible market strategies and user-centric service models, are continuously eroding the market share of traditional joint venture brands.

In this channel transformation, various brands have chosen different breakout paths based on their own circumstances. BMW has opted for the most aggressive direct sales model, announcing that it will abandon the traditional dealership model as early as 2027. Behind this decision is BMW's pursuit of comprehensive control over the sales process. In the new model, the role of dealerships will shift from "inventory holders" and "price decision-makers" to service intermediaries, focusing on vehicle display, delivery, and after-sales service.

In contrast, Toyota has adopted a more pragmatic approach to channel integration. Its "single city, single store" pilot project allows each city to retain only one 4S shop that sells models from both North and South Toyota, while also handling after-sales services for both brands. This model, through rational resource integration, not only reduces the cost of channel restructuring but also prevents service gaps, achieving an effect of 1+1>2.

In addition, Ford's channel transformation focuses on unified command. By establishing a wholly-owned Ford Sales and Service Company in Shanghai, Ford China has achieved the integration of the sales channels of Changan Ford and Jiangling Ford. This adjustment does not strip the partners of their power; rather, it allows all parties to participate in a delegated manner, thereby avoiding internal conflicts at the dealer level and maximizing efficiency under "unified command."

"These different transformation paths reflect each brand's precise judgment of the current market situation," said automotive analyst Wang Kun to reporters from the Huaxia Times. As a luxury brand, BMW has a strong brand premium ability and can withstand the short-term pain brought by the direct sales model; Toyota, as a mainstream brand with large sales volume, needs to balance stability and efficiency, making gradual reform the optimal choice; Ford, on the other hand, needs to resolve long-standing internal conflicts through channel integration to reshape its competitiveness in the Chinese market.

The Practical Effects and Far-Reaching Impact of Channel Transformation

The advancement of channel transformation is having a tangible impact on the end market. Taking Ford as an example, after channel integration, consumers can see both family SUVs like the Edge and Explorer as well as off-road models like the Mustang and Ranger in one 4S store, completely eliminating the awkwardness of having to visit two different stores to see the cars. A sales representative from Changan Ford admitted, "In the past, when customers asked about the Mustang, we had to repeatedly explain that we only had Changan Ford models here. Now that the channels are merged, it has saved us a lot of trouble."

This convenience not only enhances the consumer experience but also brings tangible benefits to dealers. Changan Ford dealers have gained higher profit sales opportunities by introducing models such as the Mustang and F-150. Meanwhile, Jiangling Ford dealers, originally focused on off-road vehicles, have filled the price gap by leveraging family models like the Explorer and Edge L, attracting a broader customer base.

From an industry perspective, channel transformation presents three common characteristics. Firstly, "light assets, heavy operations" has become a consensus. For instance, Lincoln Motors launched the "Spark Plan," reducing the area of a single store by 80% to approximately 800 square meters, lowering the investment threshold to 1.5 million yuan, and streamlining the operating team to around 10 people. In this model, the total investment for a Lincoln store can be controlled within the range of 1 to 2 million yuan, which is only one-tenth of the investment required for traditional 4S stores.

Secondly, the key strategies are city-specific policies and "filling-the-gap layout." Traditional brands no longer blindly expand the number of outlets, but instead dynamically adjust according to regional market capacity and competitive landscape. This precise layout strategy can better meet the needs of consumers in different areas. In regions with large market capacity and intense competition, companies can appropriately increase the density of outlets to improve market coverage; in regions with small market capacity and relaxed competition, they can reasonably control the number of outlets to avoid resource waste, achieve optimal resource allocation, and enhance market competitiveness.

Furthermore, the "4S" functions of dealership networks are being weakened to focus on sales and after-sales services. The traditional 4S model of "sales, parts, service, and information feedback" has become difficult to adapt to the consumer demands of the digital age. Among them, the success of Dongfeng Nissan's N7 has validated the effectiveness of the "separation of sales and service" model, where the showroom is only responsible for product experience, and the delivery center provides transparent pricing. This transparency policy enabled the N7 to achieve monthly sales exceeding 10,000 units within three months of its launch.

In addition, the deepening of channel transformation is triggering a chain reaction in the automotive aftermarket. On one hand, the foundation of traditional 4S store after-sales business is under pressure, as the inventory pressure of original parts and the tightening of authority by manufacturers are weakening the profit flexibility of 4S stores; on the other hand, channel reform is also giving rise to new forces in the aftermarket, with new business models continually emerging, such as manufacturer after-sales chains, "second workshops" of 4S groups, and cooperative stores with dual branding.

"Different types of enterprises need to formulate corresponding response strategies based on their actual situation," Wang Kun stated. For manufacturers, on one hand, they need to strengthen technological innovation and enhance product competitiveness to attract more consumers; on the other hand, they should actively explore new channel models and establish closer, win-win cooperative relationships with dealers. For dealers, they need to actively adapt to the trend of channel transformation, improving their service capabilities and operational efficiency. This can be achieved by enhancing employee training to improve professional skills and service levels; optimizing store layout and service processes to provide consumers with a more comfortable and convenient car purchasing and after-sales experience. Additionally, dealers can expand their business scope by engaging in used car sales, automotive finance, and other services to increase revenue sources.