With auto sales curbed by the quota policy to ease traffic pressure, auto dealers in the capital city sold only 45,800 new vehicles in January, the majority of them to the buyers from surrounding cities and to those local buyers with last year's orders, said the China Association of Automobile Manufacturers (CAAM).

Deliveries from dealers to customers in Beijing declined 50 to 70 percent year-on-year in January, with a few dealers witnessing their sales plummeting by as much as 200 percent from December, said CAAM.

Su Hui, an analyst with the China Automobile Dealers' Association (CADA), told China Daily that by Feb 10, only 2,000 Beijingers among the 17,600 people who won the lucky draw purchased new cars. The sharp decline in new car sales has forced the dealers in Beijing to find new alternatives for survival.

"For domestic dealers, new car sales has been a major business for the past five years because of China's booming automobile market," said Luo Lei, deputy secretary-general of CADA.

"However, in Western countries, only 20 percent of the dealer's profit comes from new car sales, while 20 percent is from spare parts and 60 percent from after-sales service."

"The slowdown in sales may force local dealers to adjust their business to a mature structure," said Luo.

Zhong Shi, an independent auto analyst based in Beijing, agreed with Luo. "Local dealers should adjust their business models during the market stagnation, and improve their service capability for sustainable development in the future," he said.

Yan Jinghui, assistant general manager of the Yayuncun Automobile Trade Market, said that dealers should improve their customer satisfaction by building a strong and competitive brand, as well as expanding into new segments such as information service, auto financing, car tuning, auto leasing and second-hand car trade-ins.

According to Yan, the biggest auto dealer in Beijing has built an online second-hand car evaluation platform, providing information to potential buyers outside the city. Another dealer Beijing Jintai Kaiyuan Car Sales Service Co Ltd also said it plans to set up second-hand car agencies outside the city to sell their pre-owned Citroen cars in surrounding areas.

China Daily

(China Daily 02/22/2011 page16)