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Since the second half of 2018, domestic automobile production and sales have entered a decline channel, resulting in a continuous depression in the automobile industry. In particular, the superimposed impact of the epidemic in 2020, so that weak brands are even worse, have made self-rescue plans. Among them, Jianghuai Automobile has also made arrangements to transfer some of the assets of the second passenger car factory.

A few days ago, Anhui Jianghuai Automobile Group Co., Ltd. issued a notice saying that after the consideration of the 22nd session of the company's board of directors, it intends to transfer some of the assets of the second passenger car factory. It is reported that the asset evaluation value of the transfer is 716 million yuan, involving 763.57 mu of land, 253000 mu of real estate and structures, 937 sets of equipment and 19638 spare parts.

Jianghuai said that in order to invigorate the company's idle assets, on the premise of maintaining and increasing the value of the assets, the company plans to transfer related assets such as real estate and equipment of the second factory of passenger cars, in order to realize the realization of the stock assets at the same time.

The announcement also mentioned that the transfer of the second plant is mainly the production of SUV and some car models. In 2019, in order to improve production efficiency, the company will concentrate all its production on a passenger car factory. Therefore, this asset disposal will not affect the normal production and operation of the company, and if this transaction is implemented smoothly, it will have a positive impact on the company's performance, which will be subject to the transfer price and audit results.

According to public data, the second Jianghuai passenger car factory was built in 2010. Li Jianhua, deputy general manager of Jianghuai passenger car Marketing Company at that time, said that the second Jianghuai passenger car plant would be put into use in October of the following year, with a total production capacity of 600000 vehicles.

From 2009 to 2010, Jianghuai passenger car sales also showed significant growth, reaching 123400 and 201300 respectively, an increase of 111.82% and 62.15% respectively over the same period last year. At that time, the capacity utilization rate of the Jianghuai passenger car factory also reached 70%. Up to 2015, the number of Jianghuai cars at its peak reached 300000.

However, in the following years, the market competition gradually increased, the competition of independent brands became more and more fierce, and the sales of Jianghuai passenger cars began to decline when the product strength failed to keep up with the market trend. To 2019, it was only 163000, down 17.8% from the same period last year. In the first 10 months of this year, Jianghuai passenger car sales totaled 123000, down 11.5 per cent from a year earlier.

Although the overall performance of Jianghuai Automobile showed an increasing trend in the first 10 months, it benefited more from the strong performance of its commercial vehicle business. From January to October, Jianghuai commercial vehicle sales were 253000, up 15.1 per cent from a year earlier. As a result, Jianghuai has been showing a pattern of "the strong by the weak" in recent years.

At present, JAC has also taken advantage of Volkswagen to launch the co-standard Sihao passenger car brand, and according to the plan signed by both sides this year, JAC Volkswagen's total registered capital will be increased to 7.356 billion yuan. The original shareholding structure of JAC Volkswagen at 50:50 will be changed to Volkswagen China Investment to increase its equity by 75%, with a registered capital of 5.517 billion yuan, while JAC shares will be reduced to 25% with a registered capital of 1.839 billion yuan. At the same time, the management of the company will be dominated by Volkswagen China Investment, that is, Volkswagen.

In order to promote the product layout of Jianghuai Volkswagen, the agreement stipulates that after Volkswagen becomes a 75% shareholder in the joint venture, it will grant 4-5 Volkswagen brand products to the joint venture, which will be based on its pure electric platform. It will also help JAC Volkswagen boost production, although it will take time to climb the production capacity.

Some analysts said that with the cooperation between Jianghuai and Volkswagen, it is beneficial for Jianghuai to learn closely the manufacturing experience of Volkswagen and improve product quality and brand awareness. Co-standard will also further deepen the cooperation between Jianghuai and Volkswagen, and is expected to enhance the brand strength of Jianghuai passenger car products, and then improve the price and profit margin of passenger cars, or improve corporate profits. However, in the process of learning popular technology, Jianghuai should apply what it has learned, otherwise it may become a "contract factory."

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