Yong’ao, a large automobile dealer in South China, experienced a sudden explosion, leading to the closure of more than 80 4S stores and causing shockwaves throughout the industry. The company, founded in 1997, operated over 20 domestic and foreign car brands, including luxury and joint venture brands.
The closure of the 4S stores is part of a wider trend of 4S store closures in China, with nearly 1,400 stores closing in 2021, and more than 4,000 closed by 2022. The primary reason for the closure of 4S stores is the inability to sell new cars and the deteriorating revenue from after-sales services.
Additionally, the traditional 4S store model has been impacted by the emergence of direct operation models, which have lower costs and higher consumer trust. This has further eroded the profitability of the 4S store model.
The closure of Yong’ao’s 4S stores has caused a chain reaction, with banks moving to repossess vehicles and consumers rushing to check the status of their purchases. The news of Yong’ao’s collapse has sent shockwaves through the automobile retail industry.
The collapse of Yong’ao and the wider trend of 4S store closures reflect the changing dynamics of the automobile retail industry in China and mark a significant shift in the market.