AutoBeta(AutoBeta.net)07/23 Report--

According to media reports, a number of Zhengtong's 4S stores have mortgaged their vehicle certificates to banks, and many consumers have encountered difficulties in picking up their cars in their 4S stores, even after they have paid in full.

In July this year, many consumers complained that Zhengtong Motor's Foshan Baoyun BMW 4S store paid money but could not pick up the car. at the inquiry of consumers, the sales consultant of the 4S store said that the vehicle certificate mortgage could not be redeemed in the bank due to the company's financial constraints. In addition, many consumers also complained that Zhengtong's Hubei Bocheng Automobile sales and Service Co., Ltd. was "unable to pick up cars after buying Buick, Chevrolet and other brands" for the same reason.

In fact, the problem of not being able to pick up cars in Zhengtong's 4S stores came to light as early as last year. From June to December 2019, Zhengtong Automobile, including Guangzhou Baoze Automobile sales and Service Co., Ltd., Foshan Dingbao Automobile sales and Service Co., Ltd., Chengdu Qibao Automobile sales and Service Co., Ltd., Shenzhen Aoze Automobile sales and Service Co., Ltd., all exposed that consumers were unable to pick up the car after handing in the money. The reason is also due to the shortage of funds of the company, the vehicle certificate can not be redeemed in the bank. Consumers' pick-up schedules are extended indefinitely and the whereabouts of the funds are unknown.

According to the official website, China Zhengtong Automobile Service Holdings Co., Ltd. is a leading auto distribution group in China, mainly specializing in the sales of luxury and ultra-luxury brands, including Porsche, Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Volvo, Infiniti, Cadillac, as well as dealerships for mid-market brands such as FAW-Volkswagen, Buick, Nissan, Toyota, Honda and Hyundai. In December 2010, Zhengtong Motor was listed on the Hong Kong Stock Exchange and was the first luxury car dealer group to be listed in Hong Kong.

Passenger car sales in China have declined year after year since 2018, but the luxury car market has performed brightly. Sales of major luxury cars rose 11.8 per cent year-on-year to 2.206 million in 2019 and 0.6 per cent to 1.053 million in the first half of this year, according to the Federation of passengers. Although the growth rate is down from 8.6% in the same period last year, it is far better than the 23.1% decline in the overall car market.

However, Zhengtong, a distributor of luxury brands, does not enjoy the dividends. According to the financial report, Zhengtong Motor's operating income fell 6.2% to 35.14 billion yuan in 2019, and net profit fell 45% to 664 million yuan. In the first quarter of this year, operating income fell 64.2% to 3.131 billion yuan, with a net profit loss of 54 million yuan, compared with a profit of 200 million yuan in the same period last year. It is worth mentioning that when Zhengtong went public in 2010, its net profit was 276 million yuan. after 10 years of development, its net profit only tripled, and the total debt increased from 2.659 billion yuan to 31.218 billion yuan in the same period.

Affected by a variety of unfavorable factors, Zhengtong Motor opened low on July 22, with its share price still fluctuating below HK $1. 83 Hong Kong dollars in intraday trading once again refreshed its previous low. The former luxury car dealer group has been reduced to fairy shares, with a total market capitalization of only more than HK $2.2 billion, which is nearly 90% lower than the peak in 2017.

In fact, the situation of Zhengtong Motor can be said to be the epitome of many dealer groups in China. In response to this phenomenon, Zhong Shi, an automobile industry analyst, said that the problems encountered by several major dealer groups are universal, and the growth of the car market is almost stagnant. the room for growth has been compressed, brands are fighting a price war to seize market share, and bicycle profits are getting thinner and thinner, which has eroded the operating profits of dealers.

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