Controllable inventory, stable cash flow, and enhanced services: The resilient path of YONGDA AUTO dealers

In the first half of 2025, the Chinese automotive market is experiencing a triple cycle of "intensified stock competition, ongoing price wars, and breakthroughs in new energy penetration."

According to data from the Passenger Car Association, domestic passenger car sales in the first half of the year increased by 10.8% year-on-year to 10.902 million units. However, the oversupply situation has further intensified the stock competition, with automakers continuously expanding production capacity to compete for market share, while demand growth lags behind production capacity growth. In terms of competition, price wars remain at a high level, with the average price drop of new cars reaching 11.4% in the first half of the year. Upstream parts suppliers, manufacturers, and channel dealers are all facing significant profit pressure. In terms of industry structure, the penetration rate of new energy reached 50.2% (breaking through 53.3% in June), which not only squeezes the market share of traditional fuel vehicles but also shifts the focus of industry competition from price wars to technology and service competition.

Against this backdrop, shifting from scale expansion to quality prioritization has become the core direction for dealers to break through. YONGDA AUTO (03669) mid-year performance report for 2025 provides a resilient development model for the industry with its practice of "controllable inventory, stable cash flow, and enhanced services."

According to the financial report, the company achieved revenue of 27.072 billion yuan (RMB, the same below) in the first half of the year, maintaining profitability after deducting the impact of related asset impairments. At the same time, the company's operational quality indicators steadily improved, with inventory turnover days at 26.3 days, a year-on-year decrease of 0.4 days, effectively avoiding risks from new car price fluctuations; net cash from operating activities was 1.167 billion yuan, a significant year-on-year increase of 66.9%, providing financial support for business adjustments; the net debt ratio at the end of the period was 9.8%, a year-on-year decrease of 0.4 percentage points, continuously optimizing the financial structure.

Behind these performances is YONGDA AUTO's proactive move to break away from the traditional logic of winning by volume, achieving a balance between quantity and profit through refined operations. While controlling scale, the company is gradually shifting its core competitiveness from scale to operational efficiency, which is also the key to breaking through for quality dealers during the industry's transformation period.

Significant Results from Refined Operations

Specifically, in inventory management, YONGDA AUTO adopts a strategy of proactive inventory control and dynamic adjustment. On one hand, it maintains the overall stability of the new car business by actively controlling new car sales and further strengthening the management of funds for new car inventory (including prepayments) across various brands. On the other hand, it enhances the management of overdue inventory for new cars over 30 days through the linkage of new car sales and inventory fund digital systems, and ties the performance of the general manager and management team to this assessment, effectively ensuring the health of new car inventory and improving fund turnover efficiency.

As of the end of June, the company's inventory balance in transit was 4.986 billion yuan, a decrease of 6.8% compared to the end of 2024. This measure not only reduces the occupation of funds by inventory but also avoids the depreciation risk brought by new car price fluctuations, providing solid support for healthy cash flow.

In terms of improving single-store operational quality, YONGDA AUTO promotes network optimization and efficiency enhancement. In the first half of the year, the company accelerated the closure and transfer of non-core brand and non-core area stores, closing a total of 19 stores (including 12 traditional brands and 7 new energy brands), concentrating resources on developing more promising leading brands. It established 7 new leading new energy stores (including 5 Hongmeng Zhixing outlets), added 30 new energy brand authorizations, and is planning to establish 14 new energy stores (13 of which are Hongmeng Zhixing) As of the end of June, the total number of operational outlets of the company reached 209, with luxury brands accounting for 64.6% and independent new energy brands accounting for 16.7%, further enhancing brand concentration.

The direct effect of network optimization is the effective improvement of single-store operational efficiency and output. At the same time, through the diversified use of showrooms and after-sales properties, the operational costs of single stores have been further reduced, forming an advantage of "refined and excellent" outlet layout.

New Energy and Aftermarket, Building a New Growth Curve

In the irreversible trend of electrification transformation in the automotive industry, YONGDA AUTO has positioned its new energy business as a strategic core, making it a "ballast stone" to withstand fluctuations in traditional business through sales expansion and service extension. At the same time, relying on a large customer base, it strengthens after-market service capabilities to enhance profit margins with high gross profit and strong customer stickiness in after-sales business.

In terms of new energy business, YONGDA AUTO achieved independent new energy brand sales of 10,312 units in the first half of the year (including 4,455 units in the dealership model and 5,857 units in the direct sales model), a year-on-year increase of 49%. Among them, the sales of the direct sales model increased by 123.1% year-on-year, reflecting the company's channel advantages in cooperation with new force brands. More notably, the quality attributes of the new energy business stand out. The average selling price of new energy vehicles in the first half of the year was 267,300 yuan, focusing on the high-end market, with a comprehensive gross profit margin per unit maintained at over 4%, significantly higher than the gross profit level of traditional fuel vehicles. As of the end of June, there were nearly 6,000 retained orders for independent new energy brands, laying a foundation for sales growth in the second half of the year.

On the after-sales side, the growth potential of the new energy business has also been further released. In the first half of the year, independent new energy maintenance revenue reached 216 million yuan, a year-on-year increase of 75.8%; the average value per vehicle was 3,447 yuan, a year-on-year increase of 16.5%; the number of after-sales retained customers reached 72,300, an increase of 25.9% compared to the end of 2024, with a monthly compound growth rate exceeding 5%. This indicates that YONGDA AUTO's new energy business has shifted from simply selling cars to a full-cycle operation of "sales + service," continuously enhancing customer lifetime value.

With the support of the new energy business, YONGDA AUTO achieved after-sales service revenue of 4.784 billion yuan in the first half of the year, of which maintenance and repair revenue was 4.660 billion yuan, with a gross profit margin of 40.35%; the after-sales absorption rate (the ratio of after-sales gross profit covering sales and management expenses) increased to 84.2%, up 5.6 percentage points year-on-year.

To further explore incremental opportunities in the existing market, YONGDA AUTO is actively exploring and innovating business models, building diversified sales strategies. All these measures are aimed at consolidating the profitability contribution of YONGDA AUTO's aftermarket, strengthening customer stickiness, and accumulating valuable user assets for long-term development.

In addition, YONGDA's used car business has also achieved breakthroughs in stable operations. In the first half of the year, the used car transaction volume reached 30,427 units, and the company achieved a gross profit margin of 5.21% through strict control of inventory turnover and optimization of gross profit structure, an increase of 0.81 percentage points compared to the previous period Gross profit of 113 million yuan, a month-on-month increase of 8.2%; turnover days of 17.7 days, a year-on-year decrease of 2.5 days and a month-on-month decrease of 4 days. The company is also actively exploring new models such as new energy used cars, bulk vehicle sourcing cooperation, and used car exports, building a used car ecosystem to become an important link connecting new cars and the aftermarket.

The Sustainable Development Logic of "Quality Dealers" is Superior

From the operational practices of YONGDA AUTO in the first half of the year, its series of actions of "controlling inventory, stabilizing cash flow, and enhancing services" precisely confirm the core leap in the competitive logic of dealers as the automotive industry shifts from an incremental market to a stock market. The competition in the industry is no longer about who can sell more cars based on scale, but rather who can serve customers more efficiently and withstand risks with more robust finances. The "quality dealer" characteristics exhibited by YONGDA AUTO have established a long-term sustainable development underlying logic.

The advantage of this logic is first reflected in the priority of operational efficiency over scale expansion. Currently, many enterprises in the automotive dealer industry are still trapped in the dilemma of being bound to the tasks of the original equipment manufacturers (OEMs). Dealers, in order to compete for rebates, excessively take delivery of vehicles, resulting in inventory turnover days generally exceeding 40 days, with a large amount of capital occupied by inefficient inventory, while also bearing the risk of price fluctuations in new cars. YONGDA AUTO optimizes inventory turnover efficiency through proactive inventory control and dynamic adjustment strategies. This efficiency difference directly translates into a financial safety cushion, covering the company's dividend payments exceeding 100 million yuan and providing funding support for the construction of new energy outlets and digital system upgrades.

Secondly, the core competitiveness of "quality dealers" lies in constructing a profit structure that does not rely on new car sales, which is particularly prominent in YONGDA AUTO's performance in the aftermarket. The company's 84.2% absorption rate of after-sales services means that over 80% of its fixed operating costs are covered by after-sales business, allowing new car sales to contribute only a small amount of gross profit to achieve overall profitability. This after-sales support structure is the key distinguishing factor between quality dealers and scale dealers.

From a long-term development perspective, the alignment of YONGDA AUTO's quality-oriented layout with industry trends further amplifies the sustainability of its development logic. Currently, the penetration rate of new energy has exceeded 50%, and the focus of industry competition is shifting from a single price war to a comprehensive competition of "technology + service + ecosystem," with the service attributes of dealers gradually replacing sales attributes as the core value.

The new energy business that YONGDA has laid out in advance not only achieves rapid year-on-year growth in sales but also accumulates high-value new energy user assets through high-end, full-cycle services; at the same time, its brand combination of luxury cars + new energy relies on the high consumption capacity of luxury car customers to ensure short-term profitability while seizing long-term growth opportunities through new energy business, forming a business structure that balances offense and defense. In addition, the company's exploration of the battery recycling industry, layout of intelligent robots, and research on empowering sales services with AI technology have also opened up new growth spaces beyond traditional dealer businesses, injecting long-term imagination driven by technology into the quality-oriented logic.

It can be said that against the backdrop of accelerated industry consolidation, "scale dealers," reliant on incremental dividends, have weak risk resistance and gradually diminishing market competitiveness, while "quality dealers" represented by YONGDA AUTO, with their triple advantages of efficiency, profitability, and strategy, not only maintain resilience in the current cycle but are also expected to seize opportunities in the reshaping of the industry landscape, further highlighting the superiority of their development logic