Why a Chinese Car Brand Wants to Sell Coffee Instead

In a surprising move, a major Chinese car brand is looking to reinvent how vehicles are sold—not through massive dealerships, but through everyday coffee shops. The idea? Use high-footfall cafes in city centers as touchpoints to sell cars. But can a coffee shop really sell automobiles? And more importantly, should it?

Yes—but only barely. According to PSA DS China’s former president, Chen Guozhang, selling coffee in a Beijing Sanlitun or Shanghai downtown coffee shop can break even, while the same space used for a traditional 4S store (costing around $2.8 million to build) struggles to turn a profit. But don’t expect a good cup of coffee—or a good car deal—to come easily from this plan.

The 4S Store Problem

Traditional 4S auto dealerships—common in China—are expensive to set up. Chen states that building one outside the city ring road costs approximately 20 million RMB (about $2.8 million). These locations are far from city centers, making them less convenient for consumers. On top of that, dealers face pricing pressure: car manufacturers often sell vehicles to dealers below cost, creating a 'price inversion' that makes it hard for dealers to profit from vehicle sales alone.

The Coffee Shop Alternative

Chen proposes shifting some sales interactions to coffee shops. Renting space in a busy urban area like Beijing’s Sanlitun or central Shanghai or Chengdu for a coffee shop runs between 60,000 and 300,000 RMB per month (about $8,500–$42,000)—still not cheap, but significantly less than a 4S store. He suggests that while selling cars from a coffee shop may not be the main draw, the coffee operation could cover costs, with vehicle sales acting as an add-on. In his view, 'you can at least make money selling coffee, and the Chinese coffee market is expanding.'

The Coffee Shop Reality Check

Here’s the catch: most coffee shops in China don’t actually make money. While there are numerous Korean-style or 'many people’s' coffee shops, most exist more as passion projects than profitable ventures. Most customers aren’t there for the coffee—they’re seeking a comfortable space to pass the time. Selling cars in such an environment? That’s even less likely to work. Chen’s assumption that coffee shops are inherently profitable is flawed—just as assuming new car sales are always lucrative ignores the pricing and distribution challenges in the automotive industry.

What Happens If You Scale Down?

Chen acknowledges that a large, well-located coffee shop in a mall (like Guangzhou’s TaiKoo Hui or Tianhebei) might cost several million RMB to open and operate. Running a car brand like Chang'an PSA as a coffee company doesn’t make strategic sense. On the other hand, a smaller neighborhood coffee shop with minimal foot traffic might preserve the DS brand focus—but wouldn’t generate enough revenue to justify the investment. It could even become an additional financial burden for the carmaker.

The Brand Challenge for DS

The DS brand itself struggles with limited brand recognition and an underdeveloped dealer network in China. Shifting toward a cafe-based sales model could theoretically help increase visibility. But the idea of a major automaker opening branded coffee shops in malls to compete with Starbucks, Pacific Coffee, or Manting Coffee is both bold and risky. It could shake up the existing café landscape—or end up as just another failed crossover experiment.

Frequently Asked Questions

Why does DS want to sell cars through coffee shops?

DS’s former president argues that city-center coffee shops have higher foot traffic and lower rental costs (60,000–300,000 RMB/month) than 4S stores built outside city rings (costing ~20 million RMB). He believes coffee sales can cover costs while car sales serve as an additional revenue stream.

How much does a typical 4S store cost to build in China?

Building a traditional 4S auto dealership outside the city ring road in China costs approximately 20 million RMB (about $2.8 million), according to Chen Guozhang of PSA DS China.

Are coffee shops in China actually profitable?

No. Most coffee shops—especially trendy or mass-market ones—exist more for the owners’ passion or customers’ comfort than for profit. Most customers don’t come for the coffee, and the industry as a whole struggles to turn a profit.

Would a car brand really turn into a coffee company?

Potentially. Chen suggests that operating coffee shops in high-traffic urban areas could cost millions, which might shift the car company’s identity toward hospitality rather than automobiles—raising questions about brand focus and business strategy.

What are the risks of selling cars in coffee shops?

Foot traffic doesn’t guarantee car sales. Most coffee shop visitors aren’t in the market for a vehicle, and the casual environment isn’t conducive to serious auto retail. Also, if the coffee side isn’t profitable, the whole model falls apart.

Could this idea change how cars are sold in China?

Possibly. If a major automaker like Chang'an PSA opens multiple branded coffee shops in malls, it could disrupt traditional dealership models and challenge established café chains—but success is far from guaranteed.

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