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Profits down for Chinese dealers

April 27, 2012
A changing economic and regulatory environment, coupled with more products and dealerships, have led China vehicle dealers to report lower profits on 2011 operations, compared with 2010, a J.D. Power study found.
Findings from the annual study on automotive dealer sentiment, which this year counts 1,605 dealers of 38 different brands in 59 cities in China, indicate the percentage of dealers reporting they were profitable in 2011 fell to 63 percent, compared with 81 percent a year ago. Twenty percent of dealers reported losing money on their operations, up from 9 percent in the 2011 study.
“These profit findings are troubling to more than just dealers,” said J.D. Power’s Charles Mills. “Brands need dealers to continue to invest to meet their market potentials, and China customers increasingly expect more from their dealership experiences. This puts brands with lower dealer profitability at a disadvantage relative to competitors.”