Shift in Retail Landscape: The Decline of EV Showrooms in Chinese Malls

In recent years, prime ground-floor spaces in major shopping malls in Beijing and Shanghai were predominantly occupied by electric vehicle (EV) showrooms. These establishments often facilitated customer test drives by escorting them to nearby car parks. However, a significant shift has occurred as many of these showrooms have closed due to sluggish EV sales. This decline has not left mall owners disheartened; instead, a new retail landscape is emerging, populated by brands that are proving to be more effective at attracting customers and enhancing rental income.

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The new demand for retail space in these malls is being filled by a diverse array of tenants, including toy companies like Pop Mart, sportswear brands such as Lululemon, and robotics firms like Unitree Robotics. James Macdonald, head of research for China at property consultancy Savills, noted that mall owners are now less inclined to host EV showrooms as the retail sector matures. There is a growing emphasis on lifestyle, dining, entertainment, and experiential retail formats, which tend to generate more consistent consumer traffic.

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The performance of tenant sales is crucial for landlords, as it directly correlates with rental income growth. According to S&P Global Ratings, strong tenant sales can lead to positive rental reversions and higher occupancy rates. Edward Chan, a Greater China property analyst at S&P Global Ratings, emphasized that the ability of mall operators to quickly optimize their tenant mix to meet consumer demands is essential for safeguarding against potential rental declines.

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While the transition from EV showrooms to other retail formats may seem beneficial for mall owners, some critics argue that the decline of EV showrooms reflects broader challenges within the electric vehicle market in China. The closures may indicate a lack of consumer interest in EVs, which could have long-term implications for the industry.

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James Macdonald remarked, “As the sector has matured, many malls have placed greater emphasis on lifestyle, dining, entertainment and experiential retail formats that tend to drive more consistent consumer traffic.” This sentiment underscores the strategic pivot mall owners are making in response to changing consumer preferences.

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As the retail landscape continues to evolve, it remains to be seen how mall operators will further adapt to consumer trends. The shift away from EV showrooms may pave the way for more innovative retail concepts that align with the interests of modern shoppers, potentially reshaping the future of shopping malls in China.

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• “From the landlord perspective, malls may also have become less eager to host EV showrooms than they were initially,” — James Macdonald, Head of Research for China, Savills

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• “We believe the ability of mall operators to swiftly optimise tenant mix to cater to spender needs is key to protecting them from a rental drop,” — Edward Chan, Greater China Property Analyst, S&P Global Ratings

South China Morning Post