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China car rental released its 2019 financial report on March 17. According to the financial report, the total rental income of China car rental in 2019 totaled 5.559 billion yuan, an increase of 4.1 percent over the same period last year, while net profit was 31 million yuan, down 89.3 percent from the same period last year.

China car rental revealed in the financial report that in the challenging moment, the company has stopped buying new cars to maintain safe cash levels. At the same time, companies stimulate growth by encouraging car rentals to reduce physical contact. The company will continue to sell more used cars to replenish liquidity.

Total revenue increased by 4% year-on-year, but net profit plummeted 89.4% year-on-year. In addition to the losses caused by challenges in its own business, the continued consumption of Bowo cars also largely reduced the profitability of China car rental.

According to data, Foton bought Bowo cars at a price of 5 million euros in 2014, and the acquired Bowo cars put forward the slogan of "German brothers", which was instantly sought after by many consumers. Bowo cars did do well between 2014 and 2016.

Since Foton established Beijing Bowo in 2016, Bowo has been losing money. According to statistics, from 2016 to 2018, Beijing Bowo Automobile lost 484 million yuan, 985 million yuan and 2.545 billion yuan respectively, with a cumulative loss of 4.014 billion yuan in three years. The sales volume was 30, 000, 44000 and 32900 respectively, and the cumulative sales volume in three years was 106900.

Bowo's losses have led to continued losses at Foton, which is unable to support its development. On October 18, 2018, Futian Motor listed to transfer 67% of Bowo Motor shares, and Changsheng Xingye finally became the catcher of Bowo Motor.

On January 15, 2019, Foton confirmed that the transfer price for the 67% stake in Beijing Baowo Automobile Co., Ltd. to Changsheng Xingye was 3.97 billion yuan, thus Changshengxing became the transferor of 67% of Bowo Motor. It is worth noting that the real transferee of 67 per cent of Beijing Bowo Motor is actually Shenzhou Youche, which issued a notice on December 28, 2018, saying that in order to facilitate the deal, Shenzhou Youche guaranteed the shareholder loan provided by Foton Motor to Bowo Motor and helped Changsheng provide guarantee for the loan of 4.27 billion yuan. In March 2019, Shenzhou Youche announced that its subsidiary had acquired a 67% stake in Bowo Motor held by Changsheng Xingye.

After selling Baowo cars, Foton Motors quickly made a profit. according to Foton Motor's pre-earnings announcement, the net profit of shareholders belonging to listed companies in 2019 was about 360 million yuan, compared with-3.57458 billion yuan in the same period last year. Foton Motors said in the announcement that the main reason for the annual profit in 2019 is that due to the transfer of 67% of Beijing Bowo Motor, the transfer will no longer be included in the scope of the merger, resulting in a substantial loss reduction compared with the same period last year.

At the same time, sales of Bowo cars increased after Shenzhou Youche acquired Bowo cars. Of course, as for the reasons for the growth, it is also obvious that China Rental cars need to purchase a large number of cars every year to maintain operation, and Bowo Automobile has become a platform for its car supply. Delivering cars to China Rental cars can increase sales, and there is no need to find another way to purchase cars. Why not?

After China rented cars became the pickup of Bowo cars, the profit level dropped sharply in 2019, which was caused by Bowo cars. In fact, the net profit of car rental in China fell by 40% in 2017, 67% in 2018 and 89.3% in 2019. Even without Bowo cars, China car rental is still in a state of loss, but to a certain extent, the acquisition of Bowo car has intensified the profit level of car rental in China.

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