AutoBeta(AutoBeta.net)05/12 Report--

Car sales rose 4.4 percent year-on-year to 2.07 million vehicles in April, according to the China Automobile Association, the first increase in sales in 2020 and the first in 21 months. However, despite April's surprising performance, February and March sales were too low to make the first four months of this year's production and sales unsatisfactory. Data show that the cumulative sales volume of vehicles from January to April was 5.761 million, down 31.1% year-on-year.

In terms of specific country brands, sales of self-owned passenger cars in China fell 39.2% to 1.689 million in the first four months, accounting for 38.1% of the passenger car market share, down 2.5% year-on-year. Among other national brands, in addition to the increase in the share of German and Japanese brands in the domestic market, the shares of American, Korean and French brands declined significantly, among which the share of French brands in the domestic market declined to 0.3%.

In the domestic joint venture brand sales continue to pick up the situation, the development of joint venture brands in China has encountered bottlenecks. Among the legal brands, Dongfeng Renault has withdrawn from the Chinese market. At present, it is also Shenlong Automobile. However, the current development of Shenlong Automobile in China is not optimistic. In April, sales volume still declined sharply.

According to the data disclosed by Dongfeng Motor Group, the sales volume of DPCA in China in April this year was 5222 vehicles, 45.28% lower than 9543 vehicles in the same period last year; the cumulative sales volume from January to April was 11607 vehicles, down 73.74% from 44201 vehicles in 2019, and the decline rate of DPCA was much higher than the average industry level in the Chinese market.

In the case of continued sluggish sales, layoffs, pay cuts and asset sales have become the "best choice" for Shenlong Automobile. According to the documents of Wuhan City Economic Development Zone, the local government plans to support Shenlong Automobile to dispose of idle production capacity and dispose of the assets of Shenlong Automobile Factory No.1 by means of government collection and storage. In April 2020, the planning adjustment bidding and survey evaluation audit shall be started, the investigation and measurement of property rights such as land, real estate and equipment shall be completed in May, the preliminary evaluation and audit shall be completed in June, and the compensation price and collection scheme shall be determined through negotiation in July.

Founded in May 1992, DPCA is headquartered in Wuhan Economic and Technological Development Zone and has four complete vehicle factories, three of which are located in Wuhan and one in Chengdu. As one of the earliest brands to enter the Chinese market, Shenlong Automobile also has a glorious history.

DPCA peaked in 2015, when sales reached 704,800 units in China, and sales have continued to decline since then. Sales fell 32% to 253,400 units in 2018 and 55% to 114,000 units in 2019. Cumulative sales from January to April 2020 fell 73.74% to 11,600 vehicles. In the face of such a serious decline in sales, Shenlong Automobile has existed in the domestic market in name only. Even so, DPCA has repeatedly said publicly,"We want to stay in China, absolutely do not want to leave China, this belief is very firm."

However, under the sharp decline in sales and huge losses, how long can DPCA last? Last September, DPCA launched its "Yuan" renaissance plan, but judging by dismal sales, the plan ended in failure. In 2020, DPCA has put forward a "capacity optimization" plan, which means that nearly 4000 employees will be forced to leave. According to internal employees of DPCA, the layoffs exceeded 30%, and nearly 4000 front-line employees will be terminated from labor contracts, suspended or transferred to Chengdu factory.

In addition, in order to cut costs, DPCA also sold its Peugeot brand and Citroen brand online last year, thinking it could reduce costs while increasing exposure, but it turned out that consumers and dealers did not buy it.

Layoffs, salary cuts and cost reductions cannot solve the problem of DPCA. The problem of DPCA in terms of products is the most fundamental problem. Although Peugeot and Citroen sales downturn, but quality complaints are not a few, including Peugeot 408, Citroen C4L and other models are complaints list frequent visitors.

In the context of the epidemic, China's auto market accelerated elimination. Dongfeng Renault delisted, DS was abandoned by Chang 'an and PSA Group, Shenlong Automobile was also in danger, and the legal brand had hovered at the edge of the market. Similar to Shenlong Automobile and other automobile enterprises, if they do not pay attention to product quality, do not optimize after-sales service, and do not meet the needs of consumers, then the brand with personality will also be abandoned by the market. Although DPCA has repeatedly stressed that it will not withdraw from the Chinese market, in the face of plummeting sales and huge losses, DPCA is unlikely to become the next "Dongfeng Renault".

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