AutoBeta(AutoBeta.net)03/10 Report--

Entering 2020, with the dismal market environment and the continuing impact of the COVID-19 epidemic, the automobile industry has entered the most depressed period in history. After the epidemic, the industry is still not optimistic, and the progress of recovery is slow, which further aggravates the worries of car companies. Therefore, in order to minimize the impact of adverse factors, SAIC launched a pay cut for senior executives, becoming the first large auto company to announce a pay cut. BAIC issued a March sales target, and leaders and employees who do not meet the target will deduct the corresponding monthly salary or be dismissed.

BAIC issued a "retail center sales assessment plan". In order to ensure that the task was achieved in March, the retail center formulated a full-staff sales linked plan to assess the performance in March.

Among them, executives at the deputy general level who fail to complete the overall wholesale task in March will deduct 50% of the overall monthly salary of 70%, or even be removed from office. For the front-line leaders of the business department, if they fail to complete the wholesale task of the business department in March, they will be removed from office + deduct 20%-40% of their monthly salary. For all the staff of the sales department, depending on the overall wholesale completion rate of the business department, a certain proportion of the monthly salary will be deducted.

According to the latest data report released by the Federation of passengers, passenger car sales in the domestic car market fell 20.4% year-on-year in January and 78.5% year-on-year in February, so car sales fell 41% year-on-year from January to February, the biggest decline in car sales in nearly 20 years. As the epidemic has not yet been officially lifted in March, and consumers are relatively cautious about buying cars, there is still great uncertainty in the car market in March. Therefore, there is a great controversy about the goal setting and assessment, and it is even regarded as a "disguised layoff" by employees.

However, the assessment program only makes clear provisions on wholesale sales, and does not mention terminal sales. Therefore, once the performance of the car market falls short of expectations, all the new cars will be handed over to the dealers by pressing the warehouse, even if the terminal sales are not satisfactory, the task of wholesale sales has been achieved.

But this way is also very dangerous. According to the inventory report of Chinese automobile dealers released by the China Automobile Circulation Association in February 2020, the survey results show that the comprehensive inventory coefficient of automobile dealers in February is 14.8, which is 6 times higher than the same period last year and 8 times higher than the previous year. The inventory level is above the warning line. If car companies continue to put pressure on dealers in March, it will directly cause dealers to be overburdened.

It is understood that the assessment was conducted in March by the BAIC Marketing Business Committee, which mainly manages the BEIJING brand, which is the business integration of BAIC Saab and BAIC New Energy brands.

In recent years, the field of BAIC fuel vehicles continues to regress, mainly supported by new energy vehicles. In 2019, BAIC's new energy production fell 60 per cent to 44300 vehicles compared with the same period last year, and sales reached 150000 vehicles, down 4.7 per cent from the same period last year. In 2020, BAIC New Energy sold only 3008 vehicles from January to February, down 59 per cent from the same period last year.

BAIC New Energy, even though it has received a number of government subsidies, is still at a loss. BAIC New Energy reported in the third quarter of 2019 that its operating income in the first three quarters (January-September) was 17.48 billion yuan, an increase of 79 percent over the same period last year, a loss of 270 million yuan, and a loss of 944 million yuan after deducting non-operating profits and losses. Among them, BAIC New Energy received a total of 510 million yuan in non-recurrent profit and loss projects.

On January 1, 2020, BAIC New Energy announced that it had received 300 million yuan of incentive funds for sophisticated industries allocated by the Financial Audit Bureau of Beijing Economic and technological Development Zone, which would be included in the total profits in 2019. As a result, the subsidy may make BAIC's new energy profits positive in 2019.

Some people in the industry believe that BAIC's strict sales assessment for the marketing team is a way to promote marketing breakthroughs, but even if the marketing team is replaced as a whole, it is difficult to get BAIC's sales and transfer the pressure to the marketing team. there is no doubt that there is a temporary cure rather than a permanent cure. A more important problem should be the product itself. For example, customers generally reflect that the appearance of the vehicle is too ugly, which is an important reason for hindering sales.

SAIC reduced wages and reduced losses, and BAIC formulated strict assessment to recover losses, which is a means to ensure the normal operation of enterprises under the current depressed environment of the automobile market. As Xu Heyi, chairman of BAIC, laments, "the hard time for the auto industry has come". The plans implemented by the two large car companies may cause other car companies to follow suit.

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