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Due to the serious quality defects of the new energy vehicles provided by Lifan passenger cars to the leasing platform Panda Motors, the latter filed an arbitration claim against the former. According to the ruling made by the Chongqing Arbitration Commission, Lifan passenger cars will compensate Chongqing Panda Automobile Leasing Co., Ltd. for a total of about 783 million yuan in asset losses and revenue losses.

It is worth noting that Lifan passenger car and Panda Automobile are both subsidiaries of Lifan, so this incident is also known as "infighting" in the industry.

According to the previous announcement, Panda Motor needs to buy a large number of new energy vehicles from Lifan passenger cars due to operational needs, and the two sides signed the Framework Agreement on the purchase of New Energy vehicles on June 25, 2015. After the signing of the framework agreement, the two sides and their designated companies signed detailed "purchase and sales contracts" for the purchase of new energy vehicles. From 2015 to 2018, the two sides and their designated companies signed a total of 22 "purchase and sales contracts" and purchased nearly 10,000 vehicles.

However, after Lifan passenger cars completed the delivery of several batches of vehicles, Panda found that there were serious quality problems such as serious battery decline and design defects in the operation of these new energy vehicles, resulting in the failure of most vehicles requiring long-term maintenance. there are even problems that can not be operated, resulting in serious losses.

In the final award, Lifan passenger cars had to pay about 614 million yuan in compensation for asset loss to Panda Motor, about 161 million yuan in compensation for revenue loss, about 6.7652 million yuan in compensation for compulsory insurance, and about 1.9891 million yuan in compensation for rental loss of car parks.

At the same time, the arbitration fee of 3266431.20 yuan will be borne by the applied human-powered passenger car.

With continued losses, Lifan, which has been awarded compensation, will be dealt a heavy blow. Lifan shares stated in the announcement that the result of the arbitration will have a negative impact on the company's current or post-period profits.

Due to product quality, enterprise strategy and other problems, Lifan has not had a good time in recent years. In terms of sales volume, Lifan sold 22536 traditional passenger cars in 2019, down 75.5 percent from the same period last year, and 3091 new energy vehicles, down 69.5 percent from the same period last year. Lifan sold a total of 326 traditional passenger cars in the first quarter of 2020, down 97.85% from the same period last year, and 37 new energy vehicles in the first quarter, down 94.6% from the same period last year.

For the whole of 2019, Lifan achieved revenue of 7.4 billion yuan, down 32.35% from the same period last year, and the net profit attributed to shareholders of listed companies was a loss of 4.68 billion yuan. According to the first quarter report of 2020, Lifan realized revenue of 560 million yuan in the first quarter, down 74.88% from the same period last year. The net profit belonging to shareholders of listed companies was 197 million yuan, down 103.06% from the same period last year.

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