AutoBeta(AutoBeta.net)12/03 Report--

Since June 26 this year, the latest subsidy standard for new energy vehicles has been officially implemented, the state subsidy has been reduced by about 50%, and the local subsidy has been completely abolished, which means that the new energy vehicle industry has entered the post-subsidy era. However, JAC Motor announced a few days ago that as of November 29 this year, it had received 378 million yuan in government subsidies (excluding previously disclosed government subsidies), plus 463 million yuan in the first three quarters, bringing it to 841 million yuan this year.

This has a great effect on Jianghuai, which has been losing money, because the announcement also said that according to the relevant provisions of the "Accounting Standards for Enterprises No. 16-Government subsidies", the company and its holding subsidiaries will record the above subsidy funds into the profits and losses of the current period in 2019, which will have a positive impact on the company's profits in 2019.

According to the third-quarter results released by Jianghuai Automobile, the operating income was 37.187 billion yuan and the net profit was 122 million yuan, up 2.36% and 154.33% respectively over the same period last year. In the announcement, JAC attributed the rise in performance to "product structure adjustment" and "cost control".

In fact, its profit does not come from the growth of sales. According to JAC sales data for the first three quarters of this year, cumulative sales were 320800, down 11.27% from the same period last year, so according to the sales data, it is impossible for JAC to achieve profit growth. In addition, in July this year, Jianghuai received a fine of 170 million yuan from the Beijing Municipal Bureau of Ecological Environment for fraudulent emissions from its truck products.

The above situation alone is not enough to make Jianghuai profitable. The real reason is that the government subsidy received by Jianghuai in the first three quarters was about 463 million yuan, and in September this year, because of the subway planning in Hefei, the government levied property owned by Jianghuai Motors. According to the compensation plan of the Hefei municipal government, Jianghuai Motor received 211 million yuan in compensation for the demolition of two apartment buildings in Hefei. As soon as the compensation is offset with the fine, the remaining subsidies can also make up for the company's losses, so the profits of Jianghuai Motor basically rely on government subsidies.

Jianghuai, as a traditional car company, involves many subdivisions, including SUV, MPV, light trucks, pick-up trucks, cars, buses, new energy vehicles and many other categories, as well as OEM products, and now it is also working with Volkswagen to establish Jianghuai Volkswagen, and it is very puzzling that such an auto company does not make money.

In this regard, some people in the industry have analyzed that the reason why Jianghuai Motor has lost money year after year is to "think too much". Every field wants to divide the market, but it has not done a good job in each field, resulting in scattered investment in resources and unable to achieve focus. As can be seen from its best-selling SUV model, Ruifeng S3, there were 415 complaints in 2017, accounting for about 40 per cent of Jianghuai car owners' total complaints in 2017.

Originally thought that the new energy that cooperates with Volkswagen can be reversed with the word of mouth of Volkswagen, but Volkswagen seems reluctant to invest too much technology in Jianghuai, only using the technology that used Seattle as a platform to produce electric cars, while Volkswagen's latest MEB platform is only distributed to North and South Volkswagen, not to Jianghuai Volkswagen.

Now JAC received another 378 million yuan in government subsidies, which may also have a reversal effect in the fourth quarter. According to statistics, from 2014 to 2018, JAC received a total of 8.718 billion yuan in government subsidies, while its net profit was only 2.225 billion yuan. From this point of view, Jianghuai can still make a living on subsidies. If there is no subsidy in the long term, JAC still does not make efforts to improve the quality of its products, and it is believed that it will fall down one day.

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