CIAACE | Auto Service Chains Target Rural Towns — A Real Blue Ocean or Just Hype?

As of 2026, Tuhu Auto Care has expanded its store network to more than 8,000 outlets, with particularly rapid penetration in lower-tier markets. Among its newly opened stores in 2025, those located in lower-tier cities accounted for more than 60%. Meanwhile, Tuhu has launched the “10 Billion Yuan Subsidy, 10,000 Stores Together” initiative and introduced the “10,000 Towns, 10,000 Stores” program for township markets, aiming to increase subsidy support for township outlets and lower the franchise entry threshold.

This is not an isolated case. An increasing number of automotive service chain brands are shifting their focus from saturated first- and second-tier cities to the vast township markets. As a result, a fundamental question has emerged for the industry: Is the expansion of automotive service chains into township markets a “real blue ocean opportunity” or merely a “false demand”?

1. The Appeal of Township Automotive Service Markets: A Market Gap Exists, and Demand Is Real

The move of automotive service chain brands into township markets is not simply a short-term impulse. The attractiveness of expanding into lower-tier markets is supported by real market opportunities rather than being an imagined trend.

From the demand perspective, the foundation of township automotive service markets continues to expand. With the widespread adoption of vehicles, car ownership in counties and townships has been steadily increasing. At the same time, the maturity of new energy vehicle (NEV) technologies and growing consumer acceptance have accelerated their adoption in rural areas. Once considered rare, “green license plate” vehicles (new energy vehicles) can now be frequently seen on rural roads. This rapid growth has also created entirely new service demands, such as NEV three-electric-system inspections and battery health assessments. However, these specialized services remain largely unavailable in township markets, leaving a significant gap in professional automotive after-sales services.

From the supply side, the township automotive service market has long been dominated by “mom-and-pop shops,” resulting in uneven service quality. “Inconsistent service standards and unreliable parts quality” have become common pain points among consumers. Automotive service chain brands, relying on standardized service processes, guaranteed genuine parts, and strong brand recognition among car owners, can precisely meet the dual needs of township vehicle owners for “cost-effectiveness + service certainty,” allowing them to enjoy the same quality of services as those in major cities right at their doorstep.

The withdrawal of 4S dealerships and new policies related to the automotive aftermarket have also created greater market opportunities for automotive service chain brands. In 2025 alone, the number of 4S stores that were closed, merged, or transformed nationwide approached 5,000. A large proportion of customers from these stores will be redirected to chain automotive service stores that have already established brand reputations. The “Notice on Several Measures to Cultivate and Expand Automotive Aftermarket Consumption” issued by nine government departments, including the Ministry of Commerce, also clearly states that “automobile manufacturers should expand repair channels and parts supply channels for new energy vehicles, and must not restrict consumers from independently choosing enterprises for vehicle maintenance and servicing, nor use such choices as a reason to refuse to undertake legally required ‘Three Guarantees’ (repair, replacement, and refund) responsibilities.” On this basis, vehicle owners now have more choices for maintenance and repair services, which provides another favorable opportunity for automotive service chain stores.

2. The Reality of Township Automotive Service Markets: Not a “Guaranteed Profit Zone” — Challenges Still Remain

However, expanding into township markets is far from being a “gold mine.” Behind the opportunities lie a wide range of practical challenges.

The biggest challenge is that the average customer spending in township automotive service markets remains relatively low, which means that the operating model of chain automotive service brands — where “scale advantages create profitability advantages” — may not work effectively in lower-tier markets. Some chain brands previously expanded aggressively in a race to secure market share, but amid weakening overall terminal demand, they now face risks such as difficulty achieving profitability at individual stores and ongoing losses.

Secondly, the competitive landscape is becoming increasingly complex. Township markets are not “untapped territories.” Private gas stations are capturing customers through high-frequency services such as “free car washes with refueling,” while local “mom-and-pop shops” continue to attract customers through flexible pricing strategies and established relationships within the community. A business model relying solely on price competition or platform-based customer acquisition is difficult to sustain in the long term.

There are also practical operational barriers, which represent the most significant challenges when expanding into township markets. Many townships lack professional new energy vehicle repair technicians, making it difficult to find qualified local partners. Recruiting experienced technicians from other regions to work permanently at township stores is also challenging. In addition, logistics costs and the timeliness of parts supply are issues that must be carefully considered. These factors, which are considered basic operational requirements for urban stores, become genuine challenges in lower-tier markets.

In summary, the strategy for automotive service chain brands entering township markets cannot simply be a direct copy of their urban expansion model.

3. What Is the Right Approach for Automotive Service Chains Expanding into Township Markets?

The answer may lie in eight words: adapt to local conditions and upgrade accordingly. The goal is not to simply copy urban store models and move them directly into township markets, but to deeply adapt service offerings, pricing systems, and operational models based on the actual needs of township consumers.

The most important point is that brand standardization must not be compromised. Genuine parts guarantees, transparent pricing systems, and standardized service processes are the core competitive advantages of automotive service chain brands. They are also the fundamental reasons why township consumers are willing to choose chain stores. The “golden brand reputation” must be preserved.

On the other hand, localization is essential. Township markets are typical “relationship-based communities,” where word-of-mouth referrals are often more effective than any online advertising. Stores need to actively integrate into local communities and expand their customer reach by cooperating with local businesses and other partners, combining “brand trust + personal recommendations” to attract more customers. At the same time, based on the core pain points of township vehicle owners, stores should develop several signature service offerings and build a strong reputation around them, creating a local perception that “for this specific problem, go to this chain store — they will definitely solve it.” This can help avoid becoming an average service provider that tries to do everything but fails to excel in any particular area. 

Expanding into township markets is neither a “false demand” nor an effortless “blue ocean opportunity.” As automotive consumption in townships continues to evolve, the competitive landscape of this market is being reshaped. However, for brands that lack refined operational capabilities and a strong awareness of localized services, this so-called “blue ocean” can easily turn into a “swamp” — appearing broad and full of opportunities, but becoming extremely difficult to navigate once entered, ultimately forcing them to exit in a difficult situation.