AutoBeta(AutoBeta.net)08/18 Report--

Zhengtong Automobile Group's dealers had another problem, and the BMW 4S store once again exposed that it did not deliver the car in breach of contract, but it was difficult for consumers to buy a full-scale car.

According to media reports, Ms. Liao from Jingmen, Hubei Province, ordered a BMW 3-Series sedan from a BMW 4S store in Jingmen on June 9 this year and paid a deposit of 20,000 yuan at that time. On June 25, the sales consultant of the 4S store told Ms. Liao that the car she ordered had arrived and the final payment should be paid as soon as possible. On July 1st, Ms. Liao paid the final payment for the car to the 4S store, the total price of the car was 288000 yuan, and she was promised that the delivery procedures could be completed on July 10. To Ms. Liao's surprise, the 4S store stood up.

Ms. Liao was told that because the new car certificate was mortgaged in the bank, the process would take a month, and the 4S store sales manager had repeatedly promised that the delivery would be completed on August 1. Seeing the sincerity of the salesperson, Ms. Liao agreed to the request of the 4S store to postpone the delivery of the car. A month later, Ms. Liao still failed to pick up the car.

Ms. Liao felt that the 4S store failed to keep its promise, and the time to pick up her car was a long way off, so she once again asked the 4S store for an explanation. This time, the sales manager of the BMW 4S store in Jingmen said that the delivery time of Ms. Liao would be postponed to September 1. At the same time, the sales manager of 4S store did not respond positively to the questions raised by customers, and chose to avoid the attitude.

For the 4S store staff to treat customers of this approach and attitude, Ms. Liao said bluntly let her very disappointed and cold, unacceptable.

Data show that Jingmen Baoze Automobile sales and Service Co., Ltd. is a subsidiary of Zhengtong Automobile Service Co., Ltd. A number of dealers under Zhengtong Automobile Group have previously been exposed that they have breached the contract and failed to deliver their cars, allegedly due to cash flow difficulties encountered by Zhengtong Automobile Group as the head office.

Zhengtong Automobile, together with its subsidiaries, is a leading 4S dealership group in China, mainly selling 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. By the end of 2019, Zhengtong Motor had 135 dealerships across the country.

Zhengtong Motor's 2019 annual report shows that by the end of 2019, Zhengtong Motor's current assets were about HK $24.14 billion, down 3% from the same period last year. Due to the increase in loans and loans, current liabilities increased by 8.5% to HK $25.82 billion. Among the current liabilities, short-term loans amounted to HK $17.028 billion, notes payable of HK $2.447 billion and short-term debt of HK $194.75.

In 2020, Zhengtong issued US $173 million of bonds at an annual interest rate of 12 per cent and discounted 15.5 per cent of its placing shares on July 16, raising HK $267 million, totaling US $440 million. But on July 21, Zhengtong Motor still defaulted on an installment loan of about $100 million. On July 22, Zhengtong Motor announced that it would repay 30% of the principal and interest of the loan in two installments, and the installment loan would be extended to January 2021.

Recently, the news that Zhengtong Automobile controlling shareholders intend to sell their shares has been officially announced. On July 31, Zhengtong Motors announced that the controlling shareholder intends to sell 29.9% of the company's shares at a premium, which was taken by Xiamen International Trade holding Group Co., Ltd., a state-owned enterprise controlled by the Xiamen municipal government.

Zhengtong Motor, which has encountered operational problems and capital crisis, has to rely on equity sales to partially solve the capital problem.

Some analysts believe that with the help of industry transformation and upgrading, the concentration of the industry will continue to increase, the survival of the fittest among enterprises is accelerating, differentiation will intensify, some brands will gradually withdraw from the competition, and some dealers will also close down or sell their business.

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