Auto after-sales services booming; companies chase market share

An auto after-sales service facility in Guiyang, Guizhou province, Revenue from that automotive after-sales services market exceeded 450 billion yuan ($72.95 billion) in 2013. Provided to China Daily

Many companies are chasing the opportunities in China's automotive after-sales services. They've entered and invested.

Revenue from that automotive after-sales services market - which includes car maintenance, parts, modification and renting - exceeded 450 billion yuan ($72.95 billion) in 2013. It's forecast to exceed 766 billion yuan in 2015, according to Chinanews.com.

After-sales service prioritized

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Growth and profits in the Chinese market remain high, Zhang Jing, an analyst at Essence Securities, said.

One of the foreign companies that entered the burgeoning market early was Germany-based Wuerth Group. It came to China in 1994.

The sales of Wuerth China in its financial 2013 were 141.9 million euros ($194 million), of which 19 percent came from its auto business.

Besides Wuerth's rapid expansion in China, Germany-based Bosch Group has set up more than 500 car maintenance shops. Japan's largest auto dealer Yellow Hat Ltd planned to have more than 500 stores in China by 2015. American ACDelco - owned by General Motors Co - aims to be the industry leader in east China.

Domestic companies are there too. Pang Da Automobile Trade Co Ltd, an automobile trader listed at the Shanghai Stock Exchange, planned to transform its focus from new car sales to car maintenance, financial leasing, parts and second-hand sales, according to a statement in April.

US-listed automotive retailer Lentuo International Inc, said in February that it will enter the domestic second-hand car market and its first step is to build a flagship store in Beijing to provide sales certification, financing and maintenance services to clients.

China, the world's second-largest economy, had more than 137 million cars at end-2013, according to data from the China Association of Automobile Manufacturers.

Vehicle manufacturing and sales, parts, and automotive after-sales services are the pillars of profit in the automotive industry chain.

In developed countries, automotive after-sales services account for about 60 percent of profit, but the proportion in China is only about 20 percent. It means the Chinese market holds great potential, according to National Business Daily.

But the scale of second-hand automobiles in China is small, with 5.2 million vehicles traded in 2013. It compares with 20 million new cars sold.