In the current downturn of the auto market, sales at Shanghai GM’s 4S stores remain strong. While many car dealers are struggling, these outlets continue to attract customers, not only for new vehicles but also for spare parts and accessories. However, a growing concern among consumers is that original parts from Shanghai GM can only be purchased and replaced through authorized 4S stores, with no option for "take-out" or third-party purchases. This has raised questions about whether the company is leveraging its control over spare parts to maintain high profit margins.
In late July, a reader named Mr. Li reached out to this reporter, asking: “As the largest domestic car seller, is Shanghai GM using its monopoly on spare parts to gain excessive profits?†He was confused about whether it was truly impossible to buy accessories elsewhere. To investigate, the reporter visited several 4S stores, including Beijing Jeep and FAW-Volkswagen. The responses were mixed. Some store managers said that while parts could be bought, they warned that the prices at their shops were significantly higher than those available in the open market. Others suggested that customers could purchase parts outside and bring them in for repairs, but they emphasized that only genuine factory parts would ensure proper vehicle maintenance.
The reporter also discovered that many automakers, such as Beijing Jeep and FAW-Volkswagen, have separate supply chains for their 4S stores and the broader accessory market. This means that consumers can choose between repairing at the 4S store or sourcing parts independently. When asked why some manufacturers don’t sell original parts openly, a Beijing Jeep 4S store manager smiled and said, “Of course, it’s good for business. If you buy from outside, the parts might be fake. You’d have to come back here to get real ones. That way, we keep more customers coming in for repairs.â€
When the reporter called Shanghai GM’s press office, they responded by stating that the main goal of their policy is to protect the market from counterfeit goods and ensure consumer rights. They claimed that allowing parts to be sold outside the 4S network could lead to substandard replacements, which might compromise vehicle safety and performance. Therefore, even if customers purchase parts themselves, they must have them installed by authorized technicians at the 4S store.
This policy became clear when Mr. Li tried to replace the radiator of his Buick Regal. After an accident, he found that the 4S store charged over 2,000 yuan for a replacement, while similar parts in the market were priced at just a few hundred. He decided to buy the part himself and have it installed by a friend. However, he was shocked to find that none of the 4S stores would sell him the original part. He visited multiple locations in Beijing, from the Shanghai GM Beijing World Bank to specialized Buick dealers, but all refused, citing strict company rules against selling parts outside the repair process.
Desperate, he went to major auto parts markets like Sihui Bridge and the western suburbs of Beijing, but even there, no one had genuine Shanghai GM parts. A shop owner told him, “Even if you find them, they’re likely fake.†This led Mr. Li to question whether Shanghai GM was using its control over parts as a way to maintain a monopoly and maximize profits.
An internal employee of a Shanghai GM 4S store revealed to the reporter that the company has strict policies to control the distribution of parts, ensuring that all repairs are done through authorized channels. This allows Shanghai GM to capture a large share of the aftermarket profits. In fact, a 4S store in Guangzhou was once suspended for three months after selling a chassis privately, which led to customer loss and penalties.
To prevent such issues, many 4S stores in Beijing secretly formed a “regional alliance†agreement, aiming to limit competition and maintain stable pricing. Under this arrangement, no store could offer lower repair prices or sell parts directly to customers. Violations would result in penalties from Shanghai GM, including reduced rebates and supply restrictions.
According to industry sources, seven 4S stores under Shanghai GM in Beijing are all profitable, with annual net profits reaching several million yuan, and some even exceeding six million. Despite a recent price cut in May, the profitability of the cars themselves isn’t as high as the aftermarket. This suggests that the 4S model is still highly lucrative, largely due to the control over spare parts.
Wang Qianhu, director of the Legal Affairs and Complaints Department at the China Consumers Association, commented that the 4S model, with its uniform pricing and exclusive supply channels, is inherently unfair. It limits competition and restricts consumer choice. “But the root cause of this situation in China is the lack of relevant laws and regulations,†he added.
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