AutoBeta(AutoBeta.net)08/10 Report--

Zhongsheng Group, the second largest car dealer group in China, has maintained a good momentum of development and achieved profit growth at a time when the new car market is declining. In 2020, under the impact of the epidemic, Zhongsheng Group also handed over a half-yearly performance report on profit growth.

On Aug. 10, Zhongsheng Holdings released first-half results, with revenue of 58.203 billion yuan, up 1.4% from a year earlier, while profits attributable to owners of the parent company were 2.29 billion yuan, up 10.1% from a year earlier.

Li Yanwei, a member of the expert committee of the China Automobile Circulation Association, said, "Zhongsheng released its interim results, which can be counted as a weather vane for luxury car dealers in the first half of the year." He further explained that although affected by the epidemic in the first half of the year, Zhongsheng's sales revenue and profits achieved positive growth. The sales and profits of Mercedes-Benz, Lexus, BMW and Toyota in Zhongsheng's brand portfolio were better than other brands in the first half of the year, and the support of car companies to dealers during the epidemic, as well as local government stimulus policies to the auto market, have played a positive role, especially the channel layout of Zhongsheng is in East and South China, where the economy is the first to rebound; in the second half of the year, Mid-Sheng is expected to continue to maintain a leading edge.

The earnings report also shows that most of the group's revenue comes from new car sales. In the first half of the year, Zhongsheng Group's new car sales revenue was 49.787 billion yuan, an increase of 0.6% over the same period last year; after-sales and boutique business revenue was 8.415 billion yuan, an increase of 6.1% over the same period last year.

Sales of luxury cars are the main driving force for the growth of Zhongsheng Group's business. In the first half of 2020, Zhongsheng Group sold 197188 new cars, down 7.8 per cent from the same period last year. Of this total, luxury brand sales reached 111653, up 5.7 per cent from a year earlier, accounting for 56.6 per cent of the group's total sales.

As of June 30, 2020, the total number of Zhongsheng Group's nationwide dealerships has increased to 365, including 210 luxury brand dealerships and 155 high-end brand dealerships. Zhongsheng Group's brand portfolio includes luxury brands such as Mercedes-Benz, Lexus, Audi, BMW, Volvo and Jaguar Land Rover, as well as mainstream brands such as Toyota, Nissan and Honda.

The overall industry environment is downward, and Zhongsheng Group continues to expand. In July, Zhongsheng Group announced that its wholly-owned subsidiary Zhongsheng Dalian would buy a 100% stake in eight target companies with six Mercedes-Benz 4S dealerships in Hubei, Fujian, Yunnan and Jiangxi. And two Jaguar Land Rover 4S dealerships in Jiangsu and Jiangxi, and the target company owns three sites in China.

Zhongsheng Group believes that this transaction will strengthen the Group's luxury brand portfolio, realize the Group's expansion of its network of 4S dealerships in key areas of the country, and help further expand the Group's operating scale and competitive advantage.

Since the decline in new car sales in China and the sharp change in the industry environment, the problems of some poorly managed dealer groups have highlighted that large groups have significantly reduced their business, and Zhengtong Group is also in financial difficulties. Zhongsheng Group believes that with the help of the transformation and upgrading of the industry, the concentration of the industry will continue to increase, the survival of the fittest among enterprises is accelerating, differentiation will intensify, and some brands will gradually withdraw from the competition. some dealers will also close or sell their business.

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