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Zhengtong Automobile Group, a giant of Chinese car dealers and one of the core dealers of luxury brands, is facing financial difficulties. Many of its dealers have been repeatedly exposed that it is difficult to pick up cars, but consumers are unable to pay for cars. Procrastinate again and again. This time, it was revealed that there was a problem with China Auto South, which is owned by Zhengtong Automobile.

Recently, there are media reports that Mr. Wang spent 320000 yuan on June 13 to buy a Jaguar XFL2.0 in Haikou "Hainan China Automobile South Automobile sales and Service Co., Ltd.". After signing the purchase contract, the 4S store promised that the final delivery time would be July 28, but on the 28th, Mr. Wang did not pick up the car and was told by the 4S store that the car could not be taken away for the time being and could not apply for a refund.

In response to this matter, the manager of the exhibition hall of the 4S store explained: "Hainan Sinochem South Automobile sales and Service Co., Ltd. belongs to China Zhengtong Automobile Service Holdings Co., Ltd., and the head office implements vertical financial management over our company. Therefore, our company has no financial executive power. Therefore, when we receive Mr. Wang's car purchase payment, we will hand it over directly to the head office, and Mr. Wang's vehicle release procedures will also be handled by the head office in full charge. " Manager Li also said that the situation encountered by Mr. Wang was a coincidence, because the head office recently encountered cash flow difficulties and other problems, so the time for vehicle release procedures has become longer.

After communicating again, the two sides finally reached a temporary agreement: Sinochem South 4S store completed the unmortgaging procedures of the car within 8 months, and handed over the vehicle and data to the customer; presented three times of routine maintenance in the store, and provided a walking car for customers to use. If the CNAC Nanfang 4S store fails to unmortgage the car within the specified time and cannot deliver the vehicle to the buyer, the company will bear the relevant legal liability and compensate the customer for the corresponding losses, and cooperate with the customer to take legal proceedings.

This is also the case at another Sinochem South 4S store. According to media reports, on May 31 this year, Mr. Lin bought a Land Rover found sports car at the store of Fujian China Automobile South sales and Service Co., Ltd., on Zexu Avenue, Cangshan District, and made a down payment of more than 160000. It was originally agreed with the 4S store that the car could be picked up within 20 working days, but now by the end of July, his car is still unable to pick up.

After asking the 4S store why he could not pick up the car, Mr. Lin was told that the head office was short of funds and took away all the car owners' money, but the head office did not allocate funds, so the dealers could not take the money to the bank to release the car and hand it over to the customer.

Fujian China Auto South 4S store service manager also explained: "now the company's money is in the headquarters, we can only wait for the headquarters to rank in order to deal with the ransom certificate." In this regard, the company also promised to make a certain compensation for customers, according to the daily interest rate of 5/10000 to customers to do an equivalent compensation, but also actively deal with Mr. Lin's car.

In addition, in July this year, Foshanbao's operation of the BMW 4S store was complained by more than a dozen car owners. The ordered BMW was unable to pick up the car, and the 4S store was delayed again and again. Under questioning, the sales consultant finally told the truth, saying that the company's funds were relatively tight, and if there was no money to go to the bank, the car certificate could not be redeemed. Viewed from the enterprise information, Foshanbao running Automobile sales and Service Co., Ltd. belongs to Zhengtong Automobile Service Co., Ltd.

Many dealers of Zhengtong Motors have frequently complained about the problem of "unable to pick up the car after payment", the specific reason is the same, also because the head office is short of funds, the vehicle certificate is pledged in the bank can not be redeemed, the consumer car pick-up schedule has been indefinitely extended and the whereabouts of the funds are unknown.

The head office was short of funds and failed to repay its maturing debts. In mid-July, Zhengtong Motor was found to have defaulted on outstanding installments owed to the principal of $380 million in term loan financing. Zhengtong Motor announced that it had repaid 30% of the principal and accrued interest in two installments, and that the repayment of the amortized loan had been extended to January 2021 with the consent of the lending institution.

According to the information, Zhengtong Automobile and its subsidiaries are the leading 4S dealership group in China, mainly selling luxury and ultra-luxury brand cars. The company was listed on the Hong Kong Stock Exchange in 2010 and is the first luxury car dealer group to be listed in Hong Kong, China. Zhengtong Motor staged "Snake Swallow Elephant" in 2011, buying Shenzhen CNAC South Investment Group Co., Ltd., which is twice its size, for 5.5 billion yuan.

According to the financial report, Zhengtong Motor's operating income fell 6.2 per cent to 35.14 billion yuan in 2019, while its net profit was 664 million yuan, down 45 per cent from the same period last year. Zhengtong, which focuses on luxury brands, has halved its profits at a time when luxury car sales continue to grow, perhaps because of its own operational problems.

By the end of 2019, Zhengtong Motor has 135 outlets across the country, representing luxury and ultra-luxury brands, including Porsche, Mercedes-Benz, BMW, Audi, Jaguar Land Rover, Volvo, Cadillac, Infiniti and so on. At the same time, it also operates dealerships for mid-market brands such as FAW-Volkswagen, Buick, Nissan, Toyota, Honda and Hyundai.

In 2020, Zhengtong Motor's first-quarter operating income fell 64.2% year-on-year to 3.131 billion yuan, while net profit turned into a loss of 54 million yuan, compared with a profit of 200 million yuan in the same period last year. The loss of performance has also further exacerbated Zhengtong's funding problems.

An industry analyst said, "for car dealers, the shortage of funds is the norm, a large amount of inventory requires a lot of cash investment, once financing difficulties, the capital chain is easy to break." At present, with the intensification of competition in the automobile sales market, various dealers are fighting a price war in order to seize the market, at the expense of profits, and the problem of price upside down is serious, which undoubtedly further leads to the emergence of business problems. The successive problems of several car dealer groups may also mean that the industry will usher in a change.

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