AutoBeta(AutoBeta.net)05/04 Report--

As the Chinese automobile market enters the stock competition, the market competition intensifies and other phenomena, the dealer group management level appears a great turning point, the operation continues to lose money, and the sale of stores has become the current survival situation of many dealer groups. The large group of large domestic car dealers reported a loss of more than 6 billion in 2018 and another 500 million in the first quarter of this year.

According to the report, the operating income of the giant group reached 42.034 billion yuan in 2018, down 40.37 percent from the same period last year, while the net profit belonging to shareholders of listed companies lost 6.155 billion yuan, down 3003.23 percent from the same period last year.

In the first quarter of 2019, the operating income of the giant group was 4.483 billion yuan, down 68.26% from the same period last year; the net profit attributable to shareholders of listed companies lost 489 million yuan, down 1168.05% from the same period last year.

As for the huge losses, giant said it sold 254400 vehicles in 2018, down 227300 from the same period a year earlier. Due to the company's shortage of funds, insufficient procurement seriously affected the company's procurement and sales, because the company's procurement volume was insufficient, it was unable to fully obtain preferential policies and rebate support from manufacturers; the amount of financing decreased, financing costs increased, and financial expenses increased; the company is eager to cash in inventory, some of the older vehicles can only be sold at a discount, resulting in an increase in operating costs and a decline in gross profit.

The giant group also said in its annual report that it was under pressure in terms of corporate and cash flow. Among them, in 2018, due to the large fluctuations in the market environment and the continuous fermentation of the company's filing and investigation events, the company is facing unprecedented pressure and challenges. The net cash flow generated by the operating activities of the large group in 2018 was-12.232 billion yuan, mainly due to the fact that the expenditure on the purchase of the whole car was more than the recovery of the car sales.

The continued operating losses reflect that there have long been problems in the capital chain of the huge group, selling stores to survive, and internal management chaos are also reflected in the frequent resignation of senior executives.

The personnel of the huge group has been in turmoil, with five senior executives and one supervisor resigning since June 2018. From August to September 2018, the two secretaries of the company resigned one after another within a month, and to February 2 and February 14 this year, the giant group issued two more executive resignation announcements.

Under the financial pressure, the huge group decided to sell some 4S stores to alleviate the financial difficulties. In May 2018, 100% shares in five Mercedes-Benz 4S stores were transferred directly or indirectly for 1.25 billion yuan, and then 45% shares in each of the five Mercedes-Benz 4S stores were transferred to Tianjin Zhongyuan Star Company. On August 10, the giant group once again announced the sale of its direct or indirect holdings, including Beijing Resa, Jinan Audi, Jinan Volkswagen, Jinan Ssangyong, Jinan Subaru, Shijiazhuang Guangshun Guangfeng, Shenyang Guangfeng, Shijiazhuang Hongfeng Guangfeng and nine subsidiaries of Qingdao. In addition, a large number of 4S stores have also been frequently exposed problems, some staff arrears of wages, there are direct closure.

The biggest seller is SAIC GM Wuling, which sold 36900 Wuling and Baojun brands in 2018, more than FAW-Volkswagen's 35200. However, in early 2019, a notice circulated on the Internet that SAIC GM Wuling Motors asked to rescind the signed agreement with the giant group and revoked the business license of the 4S store owned by the giant group. If the news is true, giant will not be able to continue to sell Wuling and Baojun brands of SAIC-GM Wuling Motors. The cancellation of the authorization of giant has made it lose another major source of profit, which is undoubtedly even worse.

Giant said in its annual report that the company started its business planning: 1. Invigorate assets, transform from large-scale operation to strong service and increase benefit; 2. Adjust the layout, adjust the brand, network distribution and business structure, eliminate the brands with no development prospects, and adopt the shutdown and merger mechanism as soon as possible; 3. Upgrade new energy and new retail plans to promote innovative business development; 4. Open a wide range of financing channels, speed up capital turnover, solve the shortage of funds; 5. Optimize the management structure; 6. Improve the governance mechanism.

By the end of last year, there were 806 operating outlets nationwide, 229 fewer than at the end of last year. Among them, there are 563 4S stores.

In 2017, the huge revenue reached 70 billion yuan, ranking fourth in the national dealer group, but the net profit for that year was only 200 million yuan. Now it has shrunk to 42 billion yuan, and even lost more than 6 billion yuan. What on earth has this huge company experienced?

Giant's current predicament is not alone, showing the cold winter environment of the automobile industry and the crisis faced by traditional dealers, it is just a microcosm of traditional dealers.

In early April this year, Rundong Motor, which once ranked more than 20 in revenue in the country, announced that it planned to sell 56 car dealerships at 3.4 billion yuan, meaning that the number of car dealerships operated by Rundong Motor would be greatly reduced to 29 after the completion of the transaction. Rundong also said that the rising costs of maintaining car dealerships and the profitability of the car sales business were adversely affected by these costs, so the sale of dealerships generated cash inflows that continued to support business operations and expansion.

During the blowout development of China's auto market, many automobile groups opened the road of crazy expansion, but did not grasp the construction of team marketing ability and team management ability. when there was a major turning point in the auto market, the problems were exposed and constantly highlighted, leading to today's dilapidated situation. Traditional automobile enterprises are facing a reshuffle, and car dealers are also doomed.

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