(Yicai) March 24 -- More than half of auto dealers in China ended in the red last year, with the percentage exceeding 50 percent for the first time in several years, mainly due to intensifying competition in the world's largest car market.

Fifty-six percent of car dealers reported losses in 2025, compared with 42 percent the previous year, according to the findings of a recent survey conducted by the China Automotive Dealers Association. The proportion of loss-making dealerships was on a downward trend over recent years, standing at 44 percent in 2023 and 45 percent in 2022.

In addition, the percentage of dealers in the black tumbled to 24 percent from 39 percent last year from 2024, while that of those who broke even climbed to 21 percent from 19 percent.

The situation with retail prices being lower than purchase prices has worsened because of the intensified competition and a decline in demand for fuel vehicles, making it a significant factor contributing to overall losses in dealers' new car business last year. About 82 percent of dealerships faced price inversion within the year, with more than half reporting the figure at over 15 percent.

New car sales have negatively impacted dealerships' performance by 26 percent, while after-sales services were the most critical source of profits, accounting for 81 percent of the overall gross profit, with financial and insurance services contributing 24 percent.

In contrast, new car sales remain one of the primary profit sources for new energy vehicle dealers, making up 27 percent of their overall gross profit, with after-sales services accounting for 37 percent and financial and insurance services for 19 percent.

In addition, 30 percent of participants in the survey were dealers or agents of NEV brands last year, up from 17 percent in 2024.

More than half of the dealers hold a cautious outlook on China's passenger car market for this year, the report said. Only 23 percent believe that sales will grow year over year, while 32 percent predict they will remain flat.

Editors: Tang Shihua, Martin Kadiev