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COVID-19 's epidemic made car companies and major dealers miserable, but a notice issued by Dongfeng Financial Company on March 6 made Dongfeng Yueda Kia dealers sleepless all night. Dongfeng Financial said that after rejecting Dongfeng Yueda Kia's rebate support, it decided to suspend Dongfeng Yueda Kia's retail financial discount business from now on.

According to the announcement sent by Dongfeng Financial Corporation to dealers, Dongfeng Financial has received a notice from Dongfeng Yueda Kia, requiring that from March 2020, while keeping the current discount interest rate and dealer business support unchanged, Dongfeng Financial is required to refund to Dongfeng Yueda Kia according to the actual declared discount amount. Dongfeng Financial said that due to the corresponding changes in the financial market, Dongfeng Company is at the center of the impact of the epidemic, the company's financing costs have increased significantly, and the expected risks of end customers have also increased significantly. Therefore, it is no longer possible to provide rebate support to Dongfeng Yueda Kia because it has struggled to maintain a very low discount interest rate and protect the business support of dealers.

Finally, Dongfeng Financial said that based on the above situation, it made a difficult decision to suspend the implementation of Dongfeng Yueda Kia brand retail financial discount products from March 7, 2020. The discount products will not be launched until the later policy adjustment and capital cost, risk and other factors are determined.

According to the data, Dongfeng Finance is an exclusive auto finance platform built by Dongfeng Group, which provides financial services for customers who buy Dongfeng Fengshen, Dongfeng Honda, Dongfeng Yueda Kia, Dongfeng Yulong, Dongfeng popular, and Dongfeng well-off Motor.

For Dongfeng Yueda Kia, the official suspension of financial discount support policy has undoubtedly made it more difficult for dealers to promote offline and customers to buy. Nowadays, consumers mainly consider paying by installments, so providing flexible financial programs is the main promotion means of car dealers at present, and the official financial discount subsidy is more favored by consumers. Financial discount means that when consumers buy a car by installments, part or all of the interest does not need to be paid by consumers, and this part of the interest is paid by manufacturers or financial companies, thus promoting a low-interest, zero-interest financial policy support program.

Especially in the car purchase environment after the current epidemic, consumers are more cautious in car purchase and are more inclined to enjoy the official financial discount on car purchase, so as to get low interest or interest-free car purchase discount. Today, if dealers do not have sufficient financial policy support, customer promotion will be more difficult.

Passenger car sales in the domestic car market fell 20.4 per cent in January from a year earlier and are expected to fall 80 per cent in February, the biggest drop in the history of the car market, according to a report from the China Federation of passengers, and expectations for the car market in March are not optimistic. In this case, dealers need to rely more on the financial support policies provided by manufacturers or officials to stimulate consumers to buy cars.

However, for Dongfeng Financial, the move is also to reduce corporate risk. For the customers affected by the epidemic in February 2020, Dongfeng Finance has postponed the repayment to February 29, during which time there is a record of overdue personal credit information.

As a second-tier joint venture brand in the Chinese market, Dongfeng Yueda Kia has been in a difficult situation in the past two years. In addition to the influence of some external factors, the unclear brand positioning, the lack of competitiveness of vehicle models and the decline of brand premium all make Dongfeng Yueda Kia market performance flinch.

According to the data, Dongfeng Yueda Kia sold 289000 vehicles in 2019, down 22% from a year earlier. In 2020, due to the severe environment of the car market and the impact of the epidemic, Dongfeng Yueda Kia is still under heavy pressure, with wholesale sales of only 1000 vehicles in February.

During the six months when Li Feng became general manager of Dongfeng Yueda Kia, the company focused on restoring dealers' market coverage. At a dealer investor forum in December last year, 22 dealers who withdrew from the network and went out of business finally signed a restart agreement. Dongfeng Yueda Kia believes that the role of dealer channels is becoming increasingly prominent, and hopes to promote the growth of car sales by optimizing channel operations. Li Feng said that the vast majority of dealers will achieve the goal of profit.

Dongfeng Yueda Kia's vision for 2020 is to strive to raise the proportion of models worth more than 100000 yuan to more than 75 per cent, raise the profit margin of dealers to more than 80 per cent, and ensure the smooth launch of a new generation of K5 in September.

The continued decline in sales and the uncertainty of the market have made the life of dealers even more unstable. Originally, after the epidemic, the car market entered a slow recovery stage, and the authorities suddenly cut off the financial discount policy, which undoubtedly increased the market worries of Dongfeng Yueda Kia dealers.

When the news was published, Dongfeng Financial said it had resumed retail financial discount.

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