AutoBeta(AutoBeta.net)04/29 Report--

Guanghui Automobile Group is the largest car dealer group in China. Affected by falling market demand and the COVID-19 epidemic, Guanghui Automobile Group, which has nearly 800 4S stores, lost nearly 400m yuan in the first quarter of 2020.

On April 29th, Guanghui Automobile Group released a report for the first quarter of 2020, with operating income of 25.605 billion yuan, down 31.36 percent from the same period last year. Net profit belonging to shareholders of listed companies lost 397 million yuan, down 149.58 percent from 801 million yuan in the same period last year. Guanghui cars will change from profit to loss in 2020.

Guanghui Automobile Group added two new stores through new construction in the first quarter of this year, while eight stores were closed due to demolition and strategic adjustment.

The loss in the first quarter was affected by many factors. Guangzhou Automobile Group said that during the reporting period, due to the influence of COVID-19 's epidemic situation and local epidemic prevention and control policies, the company's offline stores were delayed to resume work, and the superimposed vehicle market demand was delayed, resulting in a significant decline in the company's vehicle sales business. In order to reduce the negative impact of the epidemic on the company's business, the company stepped up vehicle promotion efforts, resulting in a decline in gross profit margin.

In terms of maintenance services, in order to minimize the decline caused by the epidemic, the company increased the promotion of the maintenance business to ensure a certain number of customers, but due to the decline in the scale of maintenance, fixed costs could not be converted accordingly, affecting the overall gross profit margin performance of the maintenance business.

By the end of December 2019, Guanghui Automobile Group had established an automobile distribution network covering 28 provinces, autonomous regions and municipalities directly under the Central Government, distributing more than 50 passenger car brands and operating 841 outlets across the country, including 782 4S stores. Specifically, there are 229 ultra-luxury and luxury brand 4s stores, 522 middle and high-end brand 4s stores and 31 independent brand 4s stores.

According to the 2019 annual report of Guanghui Automobile Group, its operating income was 170.5 billion yuan, up 2.58% from the same period last year; the net profit belonging to shareholders of listed companies was 2.6 billion yuan, down 20.16% from the same period last year. The company said the decline in net profit was mainly due to the phased adjustment of China's auto industry after its first negative growth in 2018, and the decline in profitability of many of its main businesses compared with previous years. In particular, the financial leasing business is affected by the rising cost of capital, as well as the decline in profitability affected by the market competition pattern.

In the analysis of the pattern and trend of the future automobile distribution industry, Guanghui Automobile Group believes that the current automobile distribution industry is generally in a state of low concentration. According to the relevant data released by the China Automobile Circulation Association, by the end of 2018, the number of 4S stores in China has reached 29000, and some analysts predict that the number of 4S stores in China will shrink to 20, 000 within 5 years. With the rapid development of the automobile industry to structural adjustment, the speed of competition for the survival of the fittest in the automobile distribution market will be further intensified in the future, and the industry concentration is expected to be further enhanced.

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