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The influence of policy factors on the three big factors restricts the dealers running
As more capital from outside the industry enters the automobile circulation sector, competition has become increasingly intense. Since last year, major distributors in Hunan have started to proactively address market challenges. Among the strategies adopted, active marketing, price reductions, and direct engagement with communities and consumers have become key tactics. However, according to feedback from 17 auto sales companies that participated in a recent re-evaluation, three main challenges—policy factors, market size, and structural adjustments—still significantly hinder dealer development.
Industry insiders believe the current market fluctuations are inevitable. One of the most impactful factors is the macroeconomic environment, particularly affecting off-road vehicles and heavy trucks. According to dealers of Changfeng Cheetah, slower investment growth, especially due to reduced infrastructure projects in remote areas, has led to a decline in demand for off-road vehicles compared to previous years. In response, Hunan-based off-road vehicle dealers have shifted their focus toward urban users and even the private car market.
Another challenge facing car dealers is the tightening of bank credit for auto purchases. With higher credit thresholds and stricter procedures, the proportion of car loans in Hunan has dropped from 30% last year to just 7-8% now. Additionally, consumer confidence has weakened due to economic pressures, causing some buyers to delay or cancel new car purchases.
On October 1, the new "Automobile Loan Management Measures" came into effect, expanding the definition of lenders to include commercial banks, rural credit cooperatives, and non-banking financial institutions. Despite this, in Hunan, both banks and non-bank financial institutions remain relatively inactive in offering personal auto loans. The loan ratio for car purchases is unlikely to return to over 30%, as the family car market has not yet taken off.
Industry experts note that the family car market in Hunan, including the provincial capital Changsha, is still in its early stages. The percentage of cars purchased solely for commuting remains low. Even in the case of affordable models, the primary buyers are self-employed individuals and small business owners who often use the vehicles for both personal and professional purposes. Unlike cities such as Chengdu, where mini-cars are more common, the presence of mini-cars like Xiali, Geely Pride, Changan Alto, and newer models like Chery QQ, Wuling SPARK, Hafei Lubao, and Changhe Idir is still limited in Changsha.
The lack of supporting infrastructure—such as an underdeveloped credit system, lagging road construction, and income levels that haven’t kept up—has also slowed the growth of the family car market. The sudden slowdown in the auto market may be attributed to these underlying issues. However, the rapid growth seen in the past two years created high expectations, and the current slowdown is proving difficult for many to adapt to.
Frequent price cuts and the rising cost of fuel have made consumers more cautious about holding onto cash, further stalling the family car market. Meanwhile, factory-level structural adjustments are still incomplete. Most dealers in Hunan represent only one brand, influenced by factory policies. Dongfeng Nissan dealers, in particular, have experienced this firsthand.
According to Gong Mengxian, General Manager of Hunan Yuanda Automobile Sales and Service Co., Ltd., the decline in sales is partly due to the factory's ongoing structural adjustments. After the establishment of Dongfeng Nissan, the company expanded its network, opening new 4S stores across cities. However, the product structure adjustment is still in progress. The first products, such as the "Sunshine" and the original "Bluebird," are in similar price ranges and have not opened new markets. The second model, "Zhizun," is more of a consolidation rather than a breakthrough.
With the introduction of the "Scorpio" model and the upcoming 60,000 yuan sedan, the structural adjustments are gradually taking shape, but the transition will take time. Dealers may need to endure the short-term pain of this process.
By Gong Ping and Yu Zhimin