Screening out the weakest: fewer car dealers in Russia
In the second quarter, about 400 dealer contracts were terminated in Russia. Not only brands with poor sales got under the knife, but also some from the bestseller list. Dealers themselves acknowledge an overabundance of showrooms and warn that they may abandon some brands. Details can be found in the Izvestia article.
Which dealers have become fewer
According to the analytical agency Autostat, 209 dealer contracts were concluded and 382 terminated during the second quarter.Thus, over the past three months, their number has decreased by 183, or 4%. As of mid-July, there were 4,333 official dealers in the Russian Federation engaged in the sale and maintenance of passenger cars.
Previously, the number of dealers was only growing. So, last year, the number of dealer contracts increased by 18% compared to 2023, to 4,302 points. In the first quarter of 2025, the number of contracts increased again by more than 200, mainly due to the "settlement" of small brands Xcite, Knewstar, Omoda Jaecoo, etc. to existing dealerships, according to Autostat.
Dealers have closed before, but in the second quarter the number of terminated contracts exceeded the number of new ones for the first time.
During this period, Kaiyi lost the most dealers — 30, followed by DongFeng (24) and Xcite (20). Jaecoo and Solaris have 16 fewer dealers, while BAIC has 15 fewer. The networks of FAW, Geely, Exeed, Livan and Omoda have shrunk by at least 10 dealers. For a number of brands, these losses are represented by single digits, Autostat notes.
At the same time, the losses of Kaiyi, DongFeng and BAIC are significant, as they have a small number of authorized dealers. According to official websites, Kaiyi now has 63, DongFeng has 55, and BAIC has 72 points, while Jaecoo and Solaris have more than a hundred.
Some brands were able to increase their networks in the second quarter: Knewstar added 14 points, Belgee - six, Haval and KGM — four each, Hongqi and Tank — three each. New players have also appeared — Exlantix with 49 dealers and Lixiang with 30.
"There is a real war going on"
The main blow to dealers is the still "squeezed" market for new cars, says Irina Frank, CEO of Frank Auto.
— Sales are growing, but they are far from pre-crisis volumes, and many dealers, especially in the regions or representing not the most popular brands, simply do not have enough customers for profitability. Add to this the difficulties with logistics and spare parts supplies, which hit the dealer's service and wallet. Well, the manufacturers themselves, especially the Chinese ones, which are actively increasing their presence, have become tougher: they require investments in new showrooms, implementation of sales plans, and compliance with standards. Not all dealers have reached these conditions amid the high cost of loans and general economic uncertainty," she said.
When there are several dealers of the same brand or several direct competitors in one city, the weakest ones inevitably begin to be eliminated, Irina Frank added.
Market players themselves are talking about an oversupply of dealers, which is why the car business continues to lose profitability. Moreover, the problem is not in the absolute number, but in the distribution of points.
In large cities with millions, there is a real war for the customer. In small towns and remote regions, on the contrary, there are not enough dealers — it is often unprofitable to open a point there. In addition, many brands with similar offers have appeared on the market and their networks duplicate each other, Irina Frank notes.
— There was a clear overkill in Moscow and the Moscow region, where brands opened dealerships chaotically and haphazardly, neglecting such basic concepts as calculating market capacity and forecasting network profitability. In a stagnating market, if a showroom sells less than 50 cars per month, it loses out on operating profit. Only large chains with great inertia and financial stability can afford to deal with a high key rate with a 6-7% sales margin," Renat Tyukteev, Deputy General Director for New Car Sales at Avilon AG, told Izvestia.
Dealers in the two largest cities of the country, Moscow and St. Petersburg, have the biggest risks, said Nikolai Ivanov, director of Rolf's new car department.
Due to dumping, the unit yield per car sold is lower here than in the regions. In addition, the level of creditworthiness of companies is very high. In the regions, businesses are opened mainly using their own capital.
Nikolai Ivanov recalled that when sales in the Russian market amounted to 2.9 million new cars, there were fewer dealers.
— Brands of Chinese manufacturers have opened a large number of dealerships in various regions. For example, we are currently seeing a record number of such centers at Chery, Changan and others. This has never happened before! Previously, for example, Kia had 200 dealerships, but they provided sales volume of about 19 thousand cars per month. The market situation is completely different now. Our partners from Chery have more than 220 dealerships, and they sell about 10 thousand a month. Obviously, the mathematical model does not add up in this case," said Nikolai Ivanov.
Alarm bells
Experts interviewed by Izvestia talk about the risks of leaving the Russian market for some brands.
— There are certainly alarm bells, and they ring the loudest for Kaiyi. The loss of 30 dealers in a quarter is not just a recession, it is a collapse of the network. This happens when a brand has serious problems with dealer support, supplies, marketing, or strategy in principle," says Irina Frank. She still calls leaving an extreme. Brands can greatly reduce their product ranges or switch to a scheme without an official importer.
Renat Tyukteev drew attention to the fact that BAIC and FAW are changing their business model and they have a chance to increase sales. According to Nikolai Ivanov, not only the brands themselves may decide to leave the Russian market, but dealers may also refuse to cooperate.
Igor Morzharetto, partner of Autostat, sees the problem of a number of brands in the fact that they do not invest in advertising. Nevertheless, he is confident that no one will leave the Russian market.
— It is written in Chinese legislation that a company has the right to exist if several positions are observed. Export prospects are listed in the top five. If they don't exist, the company can be forcibly merged with another one," notes Igor Morzharetto. Therefore, even with low sales, they will maintain a nominal presence in Russia.
"There is a pre-default situation"
Even generally successful brands are not immune from optimization. Closing points is often a healthy cleaning of the rows, notes Irina Frank. The manufacturer gets rid of dealers who chronically fail to fulfill sales plans, poorly serve customers, or are located in a clearly unprofitable location.
— For example, 300 cars are sold per month in one region, and 10 dealerships in the same region. And mathematically, it turns out that there are 30 issues per month per showroom. This does not cover the costs of companies: employee compensation and other operating expenses. They may simply run out of resources after 6-9 months of negative work. This is especially true for small companies. Many started to simply close their businesses. And the second reason is that banks have stopped giving additional limits. Cash gaps have formed, and a pre—default situation has arisen," said Nikolai Ivanov.
Experts expect that the wave of cuts is likely to continue in the coming months. The growth in the number of new brands also has a limit. Therefore, the total number of contracts is likely to drop a little more before stabilizing, Irina Frank believes. According to Nikolai Ivanov, the reduction in the number of dealer contracts will continue, but the peak occurred precisely in the second quarter of 2025. The key rate should be reduced by at least 5-6% to make the market for new cars better, Renat Tyukteev believes.
Earlier, the Russian Automobile Dealers Association (ROAD) said that about 10% of dealerships in Russia could close by the end of the year.
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