AutoBeta(AutoBeta.net)08/25 Report--

After greatly expanding automobile dealer group, as the market enters the stock competition stage, some dealers will also enter the survival status quo of operating losses, closing down or selling their business. From the huge group selling shop broken arm survival, to Zhengtong automobile factor billion dollar loan repayment forced to sell equity, dealer group also began to move towards two-level differentiation. Now, another dealer group has an accident.

In the past, Rundong Automobile, which ranked more than 20 in revenue nationwide, not only sold its stores sharply, but also was filed for bankruptcy reorganization by creditors due to overdue debts.

On August 25, Rundong Automobile issued an announcement saying that a creditor had submitted an application for bankruptcy reorganization to the Intermediate People's Court of Xuzhou City of Jiangsu Province against Rundong Automobile Group Co., Ltd.(hereinafter referred to as "Rundong Automobile Group") on August 20,2020.

According to the announcement, the bankruptcy reorganization application is aimed at Rundong Automobile Group failing to repay 1.659 million yuan and interest owed to relevant creditors, who claim that the above-mentioned arrears of Rundong Automobile Group have not been repaid since July 19,2019. It is understood that Rundong Automobile Group is a wholly-owned subsidiary of Rundong Automobile and holds most of the latter's business operations and operating subsidiaries in the Mainland.

In fact, Rundong Automobile has continued to reduce its business scale, including the sale of stores, due to operational problems in the development process in recent years. Even so, Rundong Automobile's financial position is still very tight. In 2018, Rundong Automobile turned from profit to loss, with an annual loss of CNY 1.514 billion; in 2019, after selling more than 40 4S stores to supplement operating funds, Rundong Automobile still realized a loss of CNY 5.844 billion in the whole year.

In view of the revenue and huge loss in 2019, Rundong Automobile stated in its performance report that this was mainly due to the overall decline of the automobile industry and the closure of some automobile dealerships due to the internal restructuring and adjustment of some automobile brands and geographical businesses after the Company reassessed its business strategy.

By the end of 2018, Rundong Automobile operated 85 4S stores nationwide, including 9 luxury brands such as BMW, Land Rover, Audi and Lexus, 2 ultra-luxury brands such as Maserati and Ferrari, and 14 mainstream joint venture brands. At the end of 2019, the number of 4S stores operated by Rundong Automobile has been significantly reduced to 38, and as many as 47 stores have been sold or closed. At present, Rundong Automobile owns 12 brands, namely BMW, Audi, Lexus, Maserati, Ferrari, Buick, Shanghai Volkswagen, Kia, Dongfeng Honda, FAW Toyota, Nissan and FAW-Volkswagen.

Since 2018, Rundong Automobile has disappeared from the list of top 100 dealer groups due to continuous operation and management problems and sharp decline in performance. And industry insiders believe that many automobile groups in the "poor employment, low management ability to resist risks, manic arrogance" and other mistakes to pay, and finally fell to the reshuffle stage of crazy asset sales. Another industry insider said,"These all send a clear signal to investors in the auto industry: avoid blind expansion and maintain good liquidity, self-strength is the key to solving the problem."

According to the official website, China Rundong Automobile Group Co., Ltd. is a comprehensive service provider focusing on luxury high-end automobile brands. Founded in 1998, it has become one of the largest luxury/ultra-luxury automobile dealers in East China headquartered in Shanghai after opening its first automobile dealership in Xuzhou, Jiangsu Province in September 2001. The Company was listed on the Main Board of the Hong Kong Stock Exchange on 12 August 2014.

The performance forecast released by Rundong Automobile on August 5 shows that its revenue in the first half of this year dropped sharply to 1.4 billion-1.5 billion yuan, and the net loss is expected to be between 213 million and 313 million yuan. At the same time, under greater operating pressure, the distribution authorization agreements of some dealerships failed to be renewed after expiration, and the number of dealerships of Rundong Automobile in the first half of this year further decreased, resulting in a continuous decline in sales volume.

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