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Affected by macroeconomics, the net profit of automobile and auto parts industry in the first three quarters of this year ranked at the bottom of all industries, with a decline of 33.26%. Under the background of the overall downturn of the automobile market, all automobile enterprises have encountered unprecedented challenges, especially the marginal automobile enterprises.

Last month, a notice on the Internet to carry out risk investigation on upstream and downstream suppliers of four independent automobile enterprises, such as Zhongtai Automobile and Lifan Automobile, was circulated. The notice made it clear that the four automobile enterprises would enter bankruptcy proceedings by the end of the year, and it is estimated that the industrial chain of upstream and downstream auto parts suppliers will be involved in a total of about 50 billion yuan of bad debts.

In response to this matter, four enterprises have come forward to refute rumors, among which Zhongtai Automobile took the lead in issuing a statement saying that the news was false information, causing serious damage to the reputation of the enterprise, and has reported the case to the public security department.

Now, CCTV "roll call" reports that Zotye is in crisis, production is stagnant, factories are in a semi-discontinued state, and many stores have no cars to sell or even close. A reporter visited a number of Zhongtai automobile sales outlets, found that most of the outlets are out of stock at present. According to Zotye staff response, now they do not sell 6 cars, mainly because the new Zotye car of National 6 has not yet arrived.

In response to this, the relevant person in charge of Zotye Automobile said that the recently financed 3 billion yuan has been fully in place and is being invested in relevant R & D and production. The general manager of Zotye Automobile Brand Center said,"As long as the funds arrive, they will naturally be put into production and sent to the terminal."

The reporter also visited Zotye's production base in Hangzhou on the spot and found that Zotye's automobile production base has been in a semi-shutdown state at present. The parking lot of its production base has less than 50 finished vehicles parked, accounting for less than 1/10 of the entire area.

In fact, Zotye Automobile has suffered a lot of pressure recently. In October this year, it encountered hundreds of millions of yuan due to the lithium battery supplier Shenzhen Bic Power Battery Co., Ltd., and was sued by Bic Battery in court to freeze its property of more than 40 million yuan.

Later, it was revealed that WeiMa Automobile, which was founded less than two years ago, could hardly continue due to great difficulties encountered in its operation process. It was frequently reported that it was dissolved and bankrupt. Junma dealers defended their rights for many times, and the after-sales problems of many owners could not be guaranteed. Now Zhongtai promises to solve the after-sales problems of Junma. Jun Ma's fall also means that it will aggravate Zotye's burden and urgently need funds to supplement Zotye.

Coupled with years of declining sales and profit losses, Zotye has struggled. According to the latest sales data of China Automobile Association, Zotye Automobile accumulated 99,600 units from January to September, down 45.97% year-on-year. Financial report shows, The third quarter of this year operating income for 3.609 billion yuan, Compared with the same period last year fell 88.41%, Attributed to listed company shareholders net profit loss 470 million yuan, Year-on-year decline 524.50%; In the first three quarters, the company's operating income was 5.401 billion yuan, down 59.59% compared with the same period last year, and the net profit attributable to listed company shareholders was 759 million yuan, down 283.02% year-on-year.

In addition, Zotye also issued an announcement saying that some of the company's shares held by Tieniu Group, the company's controlling shareholder, were frozen judicially. As of the disclosure date of the announcement, Tieniu Group holds 38.78% shares of Zhongtai Automobile, most of which have been pledged, accounting for 31.95% of the total share capital of Zhongtai Automobile, and 2.40% have been frozen by judicial authorities.

Until August this year, Zhongtai Automobile revealed that, led by Zhejiang Commercial Bank, Bank of China, China Construction Bank and Yongkang Agricultural Commercial Bank will jointly issue 3 billion yuan of capital loan to Zhongtai Automobile as a rescue fund for phased resumption of production.

From encountering rumors of "bankruptcy gate", to being sued by Bick battery, falling into "debt gate", to multiple problems such as factory shutdown, profit collapse and sales halving, Zhongtai Automobile fell into unprecedented crisis in the second half of 2019.

Not long ago, Lifan Automobile was also "named" by CCTV. The operation status of Lifan Automobile, one of the representatives of Chongqing automobile manufacturing enterprises, was investigated and found that the production base was almost stagnant and the wages of employees were in arrears. The Lifan Automobile Production Base located in Liangjiang New Area had been completely shut down. The base had been sold to the Land Reserve Renovation Center of Liangjiang New Area of Chongqing City in December last year, with a purchase price of 3.315 billion yuan. More employees said,"No car production, long ago no car production, the factory has collapsed."

In fact, encountered business difficulties are not only affected by the industry, but also for many reasons. It is understood that Lifan Automobile has recently encountered a large number of lawsuits, and many auto parts suppliers and financial companies have sued Lifan for huge sums of money. Lifan shares on July 26 issued an announcement shows that Lifan shares in recent 12 months did not disclose the accumulated litigation (arbitration) amount reached 1.423 billion yuan, litigation cases mainly include financial loan contracts, factoring contracts, financial lease contracts and other disputes.

According to the performance report released by Lifan in the third quarter of 2019, in the first three quarters, the company realized operating income of 6.686 billion yuan, loss of 2.633 billion yuan and total liabilities of 17.863 billion yuan. According to the production and sales report, the company sold 22,000 traditional passenger cars from January to September, down 72.25% year-on-year; the cumulative sales volume of new energy vehicles in the first nine months was 2035, down 65.67% year-on-year. The rest include motorcycle and gasoline engine businesses, and Lifan has declined to varying degrees.

Both enterprises have reached their peak period. In 2016, the cumulative sales volume of Zhongtai Automobile reached 333,100 vehicles, with a year-on-year growth of 50%, ranking among the top ten automobile brand sales in China in that year; Lifan Automobile developed from a motorcycle manufacturer to one of China's top 500 enterprises spanning automobile, real estate, finance and other fields in 2015.

One started from motorcycles and the other started from "plagiarism". Neither of them invested too much energy in independent research and development, which also led to the failure to get rid of the low-end backward situation and continued marginalization in the deterioration of the automobile market environment. Tan Benhong, executive vice president of Changan Automobile, said earlier that "China's automobile industry has entered a comprehensive elimination period, and the stronger the strong, the greater the pressure on the weak." The survival of the fittest is more obvious, 50% of Chinese car brands I think will soon cease to exist."

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