AutoBeta(AutoBeta.net)04/05 Report--

As the Chinese automobile market enters the stock competition and the market-oriented competition intensifies, the dealer group has made a great turning point and made a loss in operation. The sale of storefronts has become the current survival situation of many dealer groups.

A few days ago, Rundong Motor, which ranked more than 20 in revenue in the country, issued an announcement that it planned to sell 56 car dealerships for 3.4 billion yuan.

Rundong Automobile said in the announcement that on April 4, the company signed an intention agreement with Kunming Yanheng Automobile sales and Service Co., Ltd. to transfer shares, which constitutes a very important sale of the company. The company intends to sell to Kunming Yanheng four indirect wholly-owned subsidiaries of the company, namely, Rundong Automobile Group Co., Ltd., Xuzhou Rundong Automobile Marketing Management Co., Ltd., Xuzhou Yuemei Automobile Marketing Management Co., Ltd. And Xuzhou Rundong Jiaogong Automobile Marketing Management Co., Ltd.). The consideration for the sale is about 3.4 billion yuan.

Four subsidiaries directly or indirectly hold and manage 62 subsidiaries of the Group, which operate a total of 56 auto dealerships in Shandong, Anhui, Jiangsu, Zhejiang and Shanghai, China.

According to Rundong Automobile's 2018 performance report, Rundong Motor has operated a total of 85 car dealership stores as of December 31, 2018, including 62 in Jiangsu Province, 14 in Shandong Province, 6 in Shanghai and 1 in Zhejiang, Anhui and Liaoning. Operations include BMW, Land Rover, Audi, Lexus and other 9 luxury brands, Maserati and Ferrari 2 ultra-luxury brands, as well as 14 mainstream joint venture brands.

It means that after the completion of the transaction transfer, the number of car dealerships operated by Rundong Motor will be reduced to 29.

In this announcement, Rundong Motor also said that the cost of maintaining car dealerships is rising, and the profitability of the car sales business is negatively affected by these costs. In this regard, the proposed sale will effectively generate cash inflows for the Group to support its business operations and expansion. In addition, the Group intends to further develop its automotive insurance agency services and vehicle financial leasing and related consulting services, which have gradually grown and made substantial profits in the past year.

In fact, Rundong Motor has also been selling its car dealerships in the past two years. In 2017, Rundong sold a subsidiary for 8.3 million yuan; in 2018, Rundong transferred three subsidiaries, including Cadillac, SAIC-Volkswagen and Hyundai 4S stores, for a total cost of 255 million yuan.

According to the 2018 results report released by Rundong Motor, Rundong Motor sold 49583 new cars in 2018, down 33.8% from 2017; its operating income was 12.7 billion yuan, down 33.5% from 2017; and its net profit was a loss of 1.52 billion yuan, from profit to loss.

Rundong Motor said in the results report that the loss was mainly due to the company's shortage of funds and the declining trend of sales in the Chinese auto market, so the company had to reduce the purchase of new cars, which directly led to a decrease in new car sales and revenue. In addition, the increase in the total amount of financing resulting from the acquisition of a number of new entities has also led to an increase in financing costs.

China Rundong Automobile Group Co., Ltd. was founded in 1998 and was successfully listed on the main board of the Hong Kong Stock Exchange on August 12, 2014. In the ranking of China's top 100 dealer groups, Rundong Motor ranked 23rd in 2017 and 20th in 2016.

Welcome to subscribe to the WeChat public account "Automotive Industry Focus" to get the first-hand insider information on the automotive industry and talk about things in the automotive circle. Welcome to break the news! WeChat ID autoWechat