Zhongsheng Group Holdings Limited: After-Sales Services Become a Profit Pillar as Dealerships Shift from “Selling Cars” to “Servicing Vehicles”

The Chinese auto market remains under pressure in 2026. According to data from the China Passenger Car Association (CPCA), from January to July this year, domestic retail sales of narrow passenger vehicles totaled 10.173 million units, down 20.3% year on year. In July alone, domestic passenger vehicle sales stood at 1.345 million units, representing an even steeper year-on-year decline of 24.7%.

Automakers are struggling to hold on, and dealerships are also facing mounting pressure. Shrinking profit margins on new vehicle sales, declining vehicle volumes, and the industry's persistent problem of excessive inventory have made life increasingly difficult for 4S dealerships. According to the 2025-2026 China Automotive Distribution Industry Development Report released by the China Automobile Dealers Association (CADA), a total of 4,961 4S dealerships exited the market across China in 2025!

However, automotive dealerships are not without opportunities. On August 31, Zhongsheng Group Holdings Limited, one of China's leading automotive dealership groups, released its 2026 interim results. The report showed that the company's new vehicle sales revenue reached RMB 46.195 billion in the first half of the year, down 20.3% year on year, while new vehicle sales totaled 188,500 units, down 17.6%. The new vehicle sales business remained loss-making. In sharp contrast, after-sales service revenue reached RMB 11.539 billion, up 0.8% year on year, while after-sales gross profit rose 2.7% to RMB 5.586 billion, with a gross margin as high as 48.4%.

New cars are becoming harder to sell and increasingly less profitable, while after-sales services are supporting a significant share of the business. This striking contrast makes Zhongsheng Group a vivid example of the industry's transformation: automotive dealerships are shifting from an incremental market driven by “selling new cars” to a stock market increasingly driven by “servicing and maintaining vehicles.” Against the backdrop of mounting pressure on new vehicle operations, after-sales services are effectively offsetting the operating pressure from the new vehicle segment and are becoming a genuine “profit anchor” for automotive dealerships.

In fact, the shift in Zhongsheng Group's profit sources is far from an isolated case. According to the 2026 China Automotive Dealership Development Report released by the China Automobile Dealers Association, new vehicle operations accounted for 74.9% of total revenue among the top 100 dealership groups in 2025. However, profit contribution is increasingly shifting toward the aftermarket. After-sales services accounted for just 9.5% of revenue but contributed 64.6% of total gross profit, with an average gross margin of as high as 44%.

This trend reflects a fundamental structural change in China's automotive market. As of the end of June 2026, China's vehicle ownership had reached 370 million units, creating a large and relatively stable demand for maintenance, repairs, insurance, and other after-sales services. In particular, the average age of gasoline-powered vehicles has already exceeded eight years, meaning the market is likely to enter a period of rapidly increasing vehicle maintenance and repair demand. As the new vehicle market declines and China's auto industry gradually shifts toward a stock-based market, automotive dealerships must reduce their dependence on new vehicle sales and seek new sources of growth. Strengthening after-sales services is therefore becoming a natural strategic choice.

From a policy perspective, the government is also continuing to strengthen support for after-sales services. On August 31, seven government departments, including the Ministry of Commerce, issued the Implementation Opinions on Promoting the Expansion and Upgrading of Commodity Consumption, explicitly calling for the expansion of automotive maintenance, modification, and full-lifecycle vehicle consumption, while supporting the automotive aftermarket. This marks another major push at the national policy level just two months after the automotive aftermarket-related policies introduced in June, making the direction of the industry increasingly clear.

The shift from “making money by selling new cars” to “making money by maintaining vehicles” is not merely a survival strategy for automotive dealerships; it is also an inevitable transition as China's automotive industry enters the stock-market era. In the competition ahead, automotive dealerships will face significant challenges from chain automotive service platforms, independent automotive service workshops, and automotive service networks backed by energy companies. Those that can retain customers through professional technical expertise and outstanding service will be better positioned to establish a strong foothold in the era of vehicle ownership and remain competitive.