AutoBeta(AutoBeta.net)06/13 Report--

Domestic car sales continued to decline, in a depressed environment encountered the switching of national five and six emission standards, resulting in a large number of national five inventory cars of various brand manufacturers. In order to clear the inventory of cars before July, many car companies would rather lose money and find ways to get dealers to sell their cars in stock, thus taking drastic price cuts, and many car companies use the slogan of discount for internal employees to buy cars. Let employees and suppliers help digest inventory. Most car companies sell national five inventory cars at a 6-20% discount, which is the biggest discount in history.

It is learned from insiders that Changan Ford is also speeding up the elimination of national five inventory cars and issuing domestic purchase offers to suppliers. Fox's discount is as low as 6.6% off.

According to the internal notice, Changan Ford suppliers and their employees can participate in the purchase of official cars. The price of the classic focus is 6. 6% off, and the price of the new generation Fox is 7. 3% off. The purchase time is from June 11 to June 30.

For example, the official guidance price of the classic focus 1.6L automatic comfort version is 110800 yuan, the internal purchase price is only 73000 yuan, while the guidance price of the new generation Fox top model is 150800 yuan, the preferential price is 110000 yuan.

For comparison, the dealer discount range of the new generation Fox, which has been on the market for only half a year, is only about 10,000 yuan, while the internal price directly gives a maximum discount of 40,000 yuan, which shows that Anford is facing the pressure of cleaning up the five-year inventory of cars.

In fact, due to the continued decline in sales, Changan Ford dealers also face greater inventory pressure. According to the sales report, Changan Ford sold less than 10, 000 vehicles wholesale in May, only 7418 vehicles, down 76.6% from a year earlier. Changan Ford's terminal retail sales in May were 19027 vehicles, which means that dealers mainly clean up inventory. Even if manufacturers take the initiative to reduce the number of wholesalers and let dealers reduce inventory, the inventory level of Changan Ford dealers still exceeds the warning line. Changan Ford's inventory index fell below 2.4 in May from 2.9 before, according to the data.

From January to May, Changan Ford sold 59015 vehicles, down 70.3 per cent from a year earlier.

In the face of market decline, declining sales and performance losses, a sharp price reduction is even worse for Changan Ford. Changan Ford contributed 80% of Changan's profits to 90% of its profits. As sales fell off the cliff, Changan also turned from profit to loss. The annual net profit of Changan Automobile in 2018 was only 681 million yuan, which plummeted 90% compared with the same period last year, of which Changan Ford lost 800 million yuan. The loss of Changan Automobile reached 2.1 billion yuan in the first quarter of this year, down 250% from the same period last year. The sharp decline in investment income caused by the collapse in sales of Changan Ford is the main reason for the loss.

To make matters worse, on June 5, Changan Ford got its first ticket from the State Administration of Market Supervision and Administration this year. The content of the announcement shows that since 2013, Changan Ford has limited the minimum resale price of downstream dealers in Chongqing by formulating a "price list", signing a "price self-discipline agreement" and limiting downstream dealers' minimum prices and network lowest quotations during the auto show. In violation of the provisions of the Anti-monopoly Law on prohibiting operators from reaching a monopoly agreement with the counterpart of the transaction to limit the minimum price of reselling goods to a third party. The above behavior of Changan Ford deprives the downstream dealers of pricing autonomy, excludes and limits the competition within the brand, actually weakens the competition among brands, and harms the fair competition in the relevant markets and the legitimate interests of consumers.

Therefore, the State Administration of Market Supervision made a penalty decision on the vertical monopoly agreement implemented by Changan Ford Company in accordance with the law and fined 162.8 million yuan.

Sales, inventory and performance are all under great pressure. In the final analysis, Changan Ford has product problems. Changan Ford has sought a solution to reverse the decline of the Chinese market. After a series of management changes, Ford China has replaced more local senior executives and accelerated the introduction of new products to adapt to the fast-changing market. As industry insiders say, this is not achieved overnight.

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