AutoBeta(AutoBeta.net)01/22 Report--

In 2019, the domestic automobile market has experienced a continuous decline throughout the year, few car companies can make a profit in this environment, and Jianghuai Automobile may become one of them. A few days ago, Jianghuai Automobile Group Co., Ltd. issued a profit announcement for 2019. The forecast shows that the company will achieve a net profit of about 100 million yuan belonging to shareholders of listed companies in 2019, and will turn losses into profits.

Jianghuai Automobile said that it expects the net profit attributed to shareholders of listed companies in 2019 to turn losses into profits compared with the same period last year, realizing a net profit of about 100 million yuan belonging to shareholders of listed companies; the net profit of shareholders belonging to listed companies after deducting non-recurring profits and losses is about-980 million yuan, compared with a loss of 786 million yuan in the same period last year.

According to the announcement, the company will turn losses into profits in 2019 because the company took the initiative to adjust its product structure, and the gross profit of its main business increased by about 540 million yuan; the company controlled accounts receivable and reduced credit impairment losses by about 300 million yuan.

In fact, JAC sales for the whole year of 2019 are not optimistic. According to JAC previously released sales data, JAC passenger car sales in 2019 were 163000, down 17.8 per cent from the same period last year. Among them, Jianghuai Motor sold 58000 pure electric passenger cars in the whole year, down 8.87% from the same period last year.

Although a new model, the Ka Hyatt A5, went on sale in November in the second half of the year, with 6000 units sold in December, sales declined year-on-year in terms of market segments. Among them, the cumulative sales in the SUV market were 87000, down 6.88% from the same period last year; the cumulative sales in the car market were 38000, down 21.7% from the same period last year; and the MPV market declined the most, falling by 32.66% to 38000 vehicles. Jianghuai Volkswagen, which cooperates with Volkswagen, is also affected by the new energy vehicle market. Jianghuai Volkswagen Sihao E20X has been on the market for more than three months and sold only 1639 vehicles in 2019.

Obviously, the sales performance can not help Jianghuai to achieve performance growth. However, JAC still receives a lot of subsidies after subsidies officially declined in the new energy vehicle market in June last year. Jianghuai Motor announced its last subsidy at the end of November last year and received a government subsidy of 378 million yuan, saying that the subsidy funds would be included in the current profit and loss in 2019, which would have a positive impact on the company's 2019 profits. With 463 million yuan in the first three quarters, Jianghuai Motor has totaled 841 million yuan in 2019.

In addition, in July last year, Jianghuai received a fine of 170 million yuan from the Beijing Municipal Bureau of Ecological Environment for fraudulent emissions from its truck products. However, in September of the same year, because of the subway planning in Hefei, the government expropriated the property owned by Jianghuai Motors. According to the compensation plan of the Hefei municipal government, the demolition of two Jianghuai apartment buildings in Hefei received compensation of 211 million yuan. As soon as this compensation is offset with the fine, the remaining subsidies can also make up for the company's losses, so JAC's profits can basically rely on government subsidies.

According to incomplete statistics, Jianghuai Motor received a total of 8.718 billion yuan in government subsidies from 2014 to 2018, while its net profit during the period was only 2.225 billion yuan.

The overall market performance shows a downward trend in 2019, and Jianghuai Motor can achieve a countertrend profit is obviously not like the announcement said because of the initiative to adjust the product structure, more from subsidies. Under the current trend that the car market is becoming more and more difficult, if there is no core technology, but blindly rely on subsidies, Jianghuai Automobile may also become a car company that is about to collapse.

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