AutoBeta(AutoBeta.net)04/04 Report--

In recent years, with the reshuffle of the domestic car market, many joint venture car companies have been marginalized. It is precisely for this reason that the company has become a "drag" on the group, leading to a decline in group profits. For example, before SAIC-Volkswagen claimed that Skoda was a drag on the company's performance, GAC GROUP's latest financial report showed that Guangzhou Auto Fick has also become the biggest lossmaking brand under the group.

Data show that GAC GROUP achieved a total revenue of 63.157 billion yuan in 2020, an increase of about 5.78 percent over the same period last year, but its net profit declined by 9.84 percent to about 6.051 billion yuan. Specifically, the 50 per cent equity share profits of Guangzhou Automobile Honda and Guangzhou Automobile Toyota, which are owned by the "two fields", are 6.015 billion yuan and 4.078 billion yuan respectively, meaning that they are the bulk of the group's profits.

While the other two GAC-Mitsubishi and GAC-Fick did not pay dividends and did not take into account impairment, the final balance of GAC-Mitsubishi was reduced by 437 million yuan. According to the disclosed financial data of Guangzhou Auto Fick, its net worth fell to-331 million yuan from 1.336 billion yuan at the beginning of the year, which means that the two companies have become lossmaking companies under the group. Among them, GAC-Mitsubishi's 50% equity share loss may be 437 million yuan, GAC Fick's 50% equity share loss may be 1.333 billion yuan. In contrast, the market situation of Guangzhou Auto Fick is more "difficult".

Guangzhou Auto Fick, formerly known as Guangzhou Auto Fiat Automobile Co., Ltd., before Guangzhou Auto Fiat changed its name in January 2015, the net assets of Guangzhou Auto Fiat was 506 million yuan at the end of 2014. according to GAC GROUP, GAC GROUP increased capital to Guangzhou Auto Fick by 1.2 billion yuan in 2015, GAC GROUP increased capital by 600 million yuan in 2016, and GAC Fick's net assets peaked at 4.422 billion yuan in 2017.

In other words, under continuous losses, GAC Fick, which had net assets of 4.422 billion yuan in 2017, and now has net assets of-331 million yuan, has almost lost all its net assets and has become insolvent under huge losses.

It is worth mentioning that GAC Fick never exported dividends or profits to shareholders from 2015 to the first half of 2020. Even in August 2020, Fick Group and GAC GROUP jointly injected another 1 billion yuan into GAC Fick, but this 1 billion yuan does not seem to be enough for GAC Fick to lose money.

According to data disclosed by GAC GROUP, Guangzhou Auto Fick's total sales in 2020 was only 40500 vehicles, down 45.18 per cent from the same period last year, and production was only 38600 vehicles. Based on the planned capacity of 328000 factories in Guangzhou and Changsha, its capacity utilization rate is only about 11.78 per cent. "the benefit is not very good" and "often have a holiday", which has also become the saying of many employees of Guangzhou Auto Fick. There are even media reports that some people in the production line have heard rumors of "losing billions a year", but they are not clear about the detailed data and the source of the data.

But it can be seen that the performance loss has a lot to do with the decline in sales. In the 11 years of development of Guangzhou Auto Fick, there have been moments of highlights and troughs. Since its establishment in 2010, the brand has been sold in the Chinese market as an import for a long time. Until the end of 2015, it was not until the end of 2015 that it began to introduce three domestic models, namely, Jeep Free Light, Liberty Man and Guide, into the market, and the introduction of domestic models took only one year, with a very fast speed.

Data show that a total of 179872 vehicles were sold in 2016, with 142216 Chinese-made models, a year-on-year increase of 260 per cent, accounting for 79 per cent of total sales. In 2017, the year-on-year increase of 23.6% to 222332, of which more than 200000 domestic models of JEEP, sales growth of 57%. Over the next three years, GAC Fick sales continued to decline, and the decline continued to expand.

Some analysts believe that the quality problem is the reason why Guangzhou Auto Fick has been criticized. Since 2017, Jeep Free Light and Compass computer main selling vehicles have successively experienced a large area of "oil burning" problems, but Guangzhou Auto Fick's practice of "only changing but not recalling" has been complained by many consumers. Under the pressure of public opinion, GAC Fick issued an announcement to recall 143900 models with 2.4L engines, the number of which exceeded the total sales of GAC Fick in 2018.

Some outsiders say that GAC Fick is going downhill, product quality problems have damaged its reputation, and what is more serious is "man-made".

On April 29th, Fiat Chrysler announced that Zheng Jie, chief operating officer (COO) of Fick Group in China and president of GAC Fiat Chrysler Automobile sales Co., Ltd., had resigned. After Zheng Jie left office, GAC Fick's operating mechanism was adjusted, GAC Fick and Guangzhou Auto Fick sales company "integrated" operation, the integration of the functional departments of the two companies, the president and executive vice president also had new appointments, but could not save GAC Fick.

At present, Guangzhou Auto Fick has only four models on sale, all of which are Jeep brand models, including Liberty Man, Compass, Free Light and Big Commander, among which there are hybrid models. However, the brand of American cars in China is ordinary, and the quality of Guangzhou Auto Fick is not good, so it is difficult to boost the sales performance of new cars in China.

Now, as a joint venture, Guangzhou Auto Fick has gradually become a third-tier brand, and the overall product sales are in the doldrums. Previously, in the eyes of consumers, Jeep is still a "feelings" brand, but now, apart from "feelings", Jeep has little left.

In addition, Peugeot Citroen and Fiat Chrysler have announced the merger of the new company Stellantis, because PSA is the stronger side of the merger, according to Tang Weishi, the new company Stellantis intends to cut brands, models and factories in China, which also made Guangfik's "going or staying" was in doubt for a time.

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