AutoBeta(AutoBeta.net)10/17 Report--

The Automobile Dealers' Chamber of Commerce of the all-China Federation of Industry and Commerce recently issued an "proposal to passenger car manufacturers," calling on mainframe factories to actively respond to automobile sales management measures to unbind and let dealers act as the main body of the market, and independently set procurement targets and supply and demand inventory according to market demand.

The letter said that as the mainframe factory blindly increased volume, one-sided pursuit of market share, and bundled dealers through a harsh assessment system, the profits of dealers were transferred to the mainframe factory, resulting in increasingly serious losses for most dealers. As a result, the proportion of profitable dealers is less than 30%. The data show that 53.5% of dealers have operating losses in 2018, and the loss area has further expanded in the first half of 2019, accounting for only 29% of profitable dealers.

Affected by the overall automobile market economy and the declining environment, the industry has experienced its first decline in 28 years, and the downward trend has not improved. In addition, China's automobile market has changed from the era of incremental competition to the era of stock competition, and dealers do not have the ability to undertake the pressure of manufacturers indefinitely.

In order to ensure the completion of the sales task, even in the traditional peak season, when dealers step up sales promotion, cut prices, and profits are affected, the market performance in September is basically the same as that in August, which still falls short of dealers' expectations. the market experienced a fake "Jinjiu".

According to the production and sales data of the China Automobile Association, automobile production and sales in September completed 2.209 million and 2.271 million respectively, up 11% and 16% respectively over the previous month, down 6.2% and 5.2% respectively over the same period last year, and an increase of 5.7% in production compared with the previous month. The year-on-year decline in sales decreased by 1.7% compared with the previous month.

Since 2018, the inventory pressure of car dealers has continued to increase. Up to now, the inventory early warning index of car dealers has exceeded the warning line for more than ten months in a row. In September, the inventory early warning index of automobile dealers was 58.6%, down 0.8 percentage points from the previous month and 0.3 percentage points from the same period last year, but the inventory early warning index was still above the warning line. The total number of dealer 4S stores has dropped 14.8% from its peak in 2017, and 4S stores in third-and fourth-tier cities with sinking channels are experiencing a severe wave of closures.

Under the pressure of depot and excessive competition in the market, dealers have to sell cars at a loss in order to digest inventory and invigorate cash flow. Some large dealer groups are overwhelmed by financial pressure, bankruptcy and reorganization, and some small dealers' capital chain is broken, so they can only withdraw from the net.

It can be seen from the gradual withdrawal of many car dealers, especially French brands and some marginal independent brands. Since the second half of 2018, dealers of Volvo, Dongfeng Peugeot, Southeast Automobile, Zhongtai Automobile, Guangzhou Auto Fick, Baowo, Guanzhi, BAIC Magic Speed, Lifan Motor and other car dealers have been withdrawn from the net and rights protection events.

Among them, Renault faces fewer and fewer dealers. In order to protect dealers, manufacturers plan not to make any assessment on the number of cars picked up by dealers from the second quarter of this year. The dealer inventory coefficient has dropped from the highest 2.59 in March to about 1.3 in June. Dealer inventory is also back to health.

As a result, in the face of the new period of long-term micro-growth or even negative growth, mainframe factories also need to make corresponding changes on the supply side, changing "production and sales" into "sales", so as to make concerted efforts to get out of the "cold winter".

Luo Lei, deputy secretary general of the China Automobile Circulation Association, has said that manufacturers should adjust their production plans in time according to market changes, including lowering the production pace, reducing dealer inventory, and keeping inventory at a reasonable level. this helps to ensure the stability of market prices and the healthy operation of the dealer system.

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