ZHONGSHENG HLDG (00881) announced its financial results for the six months ended June 30, 2025. The group achieved total revenue of RMB 77.322 billion during the period, representing a 6.2% year-on-year decrease. Profit attributable to shareholders reached RMB 1.011 billion, down 36% compared to the same period last year, with basic earnings per share of RMB 0.427.

In the first half of 2025, the group's after-sales service revenue reached RMB 11.45 billion, up 4.4% year-on-year. During the same period, after-sales service gross profit amounted to RMB 5.44 billion, representing an 8.1% year-on-year increase. This strong financial performance was driven by 4.54 million active customers generating 4 million after-sales service visits, which increased by 15.2% and 1.7% respectively year-on-year.

Since November 2024, the group completed the largest network optimization in its history, including splitting existing stores into properties operating multiple business lines, converting dealerships into ZHONGSHENG service centers, and switching business types based on existing properties. Over 20% of stores participated in this adjustment. During this period, the group added a total of 57 dealerships and 20 service centers while closing 37 dealerships.

Among the new dealerships, 48 were luxury brands, including 36 AITO, 1 HIMA, 1 Mercedes-Benz, 3 Lexus, 1 Audi, and 6 Volvo stores. These adjustments aimed to achieve business scale growth with minimal capital expenditure and cost investment, thereby optimizing operational efficiency.

Although this adjustment resulted in the closure of some mid-to-high-end brand dealerships that previously contributed higher after-sales service volumes, causing temporary operational impact with after-sales service visits growing only 1.7% year-on-year compared to the 15.2% increase in active customers, the group's same-store after-sales service visits actually increased 4.5% year-on-year in the first half of 2025. Same-store after-sales service revenue increased by RMB 813 million, up 7.9% year-on-year.

The new network generated after-sales service revenue of RMB 331 million, partially offsetting the RMB 663 million after-sales revenue from the 37 closed stores in the first half of 2024. Therefore, overall after-sales service revenue achieved a net year-on-year increase of RMB 481 million, up 4.4%.

In the first half of 2025, the group's new car sales volume was approximately 229,000 units, down about 4,000 units or 1.7% year-on-year. With brand structure adjustments, AITO brand contributed to the business for the first time, contributing 11,000 new car incremental sales during the period, partially offsetting the sales decline of other brands. Luxury brand sales proportion accordingly increased to 62.3%, aligning with the group's strategic luxury positioning.

In the first half of 2025, the group sold approximately 111,000 used cars, up 9.6% year-on-year. However, used car business revenue declined 27.0% to RMB 6.02 billion, with revenue per unit down 33.4% year-on-year. This was mainly affected by trade-in policies introduced by local governments to stimulate consumer demand. While these policies effectively boosted new car market sales, they impacted used car market transaction prices.

Most of the group's used car inventory consisted mainly of old cars eliminated by owners through trade-in programs. Local governments' vigorous promotion of consumer replacement subsidies led the group to acquire a large number of old vehicles with long service lives, directly reducing per-unit revenue. In the first half, nearly 80% of used cars sold by the group were aged 6 years or more, an increase of nearly 10 percentage points compared to the same period last year.

Meanwhile, the price war in the new car market further squeezed used car profit margins. Consequently, comprehensive profit per unit was compressed to less than RMB 3,000, with the business segment's comprehensive profit of approximately RMB 300 million, down 60.2% year-on-year. The significant contraction in used car profitability was mainly attributed to the limited retail value of aged vehicles.