The increase of income of 44 car dealers can not hide the "cold" nearly 40% of the companies' net profit and loss.-Shanghai Metals Market

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The increase of income of 44 car dealers can not hide the "cold" nearly 40% of the companies' net profit and loss.

Translation 08:40:14AM Jun 10, 2019 Source:Securities Daily

SMM News: the Chinese car market in 2019 is full of melancholy clouds. In the first five months, market production and sales data continued to be weak, including MPV, cars, SUV and other sectors still showed double-digit declines, and growth in the new energy vehicle sector also slowed further.

As for the continued decline in the car market, Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said the main reason was the overdraft of the preferential purchase tax policy, which consumed this year's market ahead of time. In addition, the slowdown of domestic investment, rising house prices, stricter environmental protection management, the early implementation of Guozhou six emission standards, etc., have also had an impact on the car market to varying degrees.

In this context, recently, the China Automobile Circulation Association released the "2019 China Automobile Circulation Industry Dealers Group Top 100 list." The reporter noted that Guanghui Automobile continues to lead the top 100 dealer groups with a gross operating income of 166.173 billion yuan and annual sales of 1.1844 million units (including used cars). Zhongsheng Group Holdings Co., Ltd. ranks second with revenue of 107.736 billion yuan, and is also the second car dealer group in China to enter the scale of 100 billion yuan in revenue. Li Xing Motor ranks third with 82.996 billion yuan in revenue.

Shen Jin, director of the China Automobile Circulation Association, believes that "the most prominent problem in the current industry is the mode of production, that is, production and sales have caused high dealer inventory;" Second, the wholesale price is seriously hung upside down, resulting in dealers selling one car at a loss, the more they sell, the more they lose; third, there are too many outlets and too close, resulting in shopping for the same brand in the same city.

44 companies with revenue exceeding 10 billion yuan Guang Hui leads the way with 166.2 billion yuan in revenue.

According to the data, Guanghui Motor reached 166.17 billion yuan in revenue in 2018, an increase of 3.4 percent over the same period last year, and a net profit of 3.26 billion yuan belonging to the owner of the parent company, down 16.3 percent from the same period last year. Among them, "vehicle sales" was the main source of revenue of Guanghui Motor last year of 142.67 billion yuan, accounting for 85.9% of revenue.

As for offline stores, by the end of 2018, Guanghui Motor had operated 839 stores, an increase of 47 from the end of 2017; operating stores included 777 4S stores, including 221 with luxury brands and ultra-luxury brands.

Zhongsheng Group, the runner-up in the list, reported revenue of 107.735 billion yuan for the whole year, an increase of 24.9 percent over the same period last year, and a net profit of 3.695 billion yuan, an increase of 6.3 percent over the same period last year. By the end of 2018, the total number of Zhongsheng Group dealerships had increased to 318, including 175 luxury brands and 143 high-end brand dealerships.

In the earlier Xi'an Mercedes-Benz rights incident in the whirlpool of public opinion, in 2018 to achieve business revenue of 82.996 billion yuan, the total sales reached 240000 vehicles. In addition, due to operational problems, the operating income of the huge group in 2018 was 42.034 billion yuan, down 40.37% from the same period last year; the net profit attributable to the shareholders of listed companies was a loss of 6.155 billion yuan, down 3003.23% from the same period last year. After selling some 4S stores to ease the financial difficulties, by the end of 2018, there were 806 outlets nationwide, 229 fewer than at the end of 2017. There are 563 4S stores.

In addition to the above three, Among the top ten dealer groups, there are 69.518 billion yuan in revenue from Shanghai Yongda Group, 54.136 billion yuan from Hengxin Automobile Group, 44.579 billion yuan from Dachang Group, 44.253 billion yuan from Guoji Automobile Group, 43.208 billion yuan from Zhejiang Yuantong Automobile Group. Huge group 42.034 billion yuan, Jiangsu Wanbang gold star 40.079 billion yuan. A total of 44 dealer groups in 2018 revenue of more than 10 billion yuan.

The reporter noted that last year, some dealer groups were seeking business upgrading and transformation, from heavy sales to heavy service transformation, in which used cars, auto finance and other derivative businesses have become the focus of dealer business transformation. Some dealer groups reported a significant increase in used car sales, with Guanghui Motor up 48.88% in 2018 and Yongda up more than 20% in 2018 compared with the same period last year.

Increase in income, no increase in profit, nearly 40% of dealer net profit loss

Since 2019, China's automobile market is changing gears from high-speed growth to high-quality development, and automobile dealer groups have also accelerated the evolution process from sellers to service providers. Shen Jinjin believes that "the era of high growth in the auto market is over, the normal future is that positive growth and negative growth will coexist, dealers will face a reshuffle, or will need to change their minds and management to get through the cold winter."

According to the 2018 Automobile Dealers Survival Survey released by the China Automobile Circulation Association, the gross profit of new cars among dealers fell to 0.4 percent in 2018 from 5.5 percent in 2017. Dealer losses rose to 39.3% from 11.4% in 2017. In 2019, this situation has not been improved, dealers' new car gross profit is generally negative, the loss area is further increased.

At the same time, dealer inventory has always been high. The circulation association survey data showed that the average inventory coefficient of dealers in the 12 months of 2018 was 1.73, higher than the early warning line of 1.5; in May 2019, the dealer inventory early warning index was 54%, still above the warning line. It is understood that at present, the inventory of the whole industry is as high as more than 3 million vehicles, equivalent to 2 months of sales, and the amount of capital occupied by the inventory in the circulation link is as high as 500 billion yuan.

For this reason, the circulation association appealed to the manufacturers to change the way of thinking, change "production and sales" to "sales", and reach a consensus on reasonable inventory at the same time.

It is worth mentioning that, in order to ensure new car sales, car dealers are also testing the car new retail, online and offline dual channel layout, sales channels and methods are constantly changing. In this regard, Shen Jinjin believes that the Internet will become a new tool for dealer group sales, or will help dealers to maintain sales growth.

In addition, the auto finance business also shows growth potential. In 2018, the revenue of Guanghui Auto Finance reached 260 million yuan, an increase of more than 20% over the same period last year, and Yongda Automobile's auto finance business also grew by more than 20% in 2018. Zhengtong Motor's financial services business earned about $840 million in interest and services in 2018, an increase of 61.7 per cent over the same period last year.

Key Words:  Car  Guanghui car  SUV 

The increase of income of 44 car dealers can not hide the "cold" nearly 40% of the companies' net profit and loss.

Translation 08:40:14AM Jun 10, 2019 Source:Securities Daily

SMM News: the Chinese car market in 2019 is full of melancholy clouds. In the first five months, market production and sales data continued to be weak, including MPV, cars, SUV and other sectors still showed double-digit declines, and growth in the new energy vehicle sector also slowed further.

As for the continued decline in the car market, Shi Jianhua, deputy secretary-general of the China Association of Automobile Manufacturers, said the main reason was the overdraft of the preferential purchase tax policy, which consumed this year's market ahead of time. In addition, the slowdown of domestic investment, rising house prices, stricter environmental protection management, the early implementation of Guozhou six emission standards, etc., have also had an impact on the car market to varying degrees.

In this context, recently, the China Automobile Circulation Association released the "2019 China Automobile Circulation Industry Dealers Group Top 100 list." The reporter noted that Guanghui Automobile continues to lead the top 100 dealer groups with a gross operating income of 166.173 billion yuan and annual sales of 1.1844 million units (including used cars). Zhongsheng Group Holdings Co., Ltd. ranks second with revenue of 107.736 billion yuan, and is also the second car dealer group in China to enter the scale of 100 billion yuan in revenue. Li Xing Motor ranks third with 82.996 billion yuan in revenue.

Shen Jin, director of the China Automobile Circulation Association, believes that "the most prominent problem in the current industry is the mode of production, that is, production and sales have caused high dealer inventory;" Second, the wholesale price is seriously hung upside down, resulting in dealers selling one car at a loss, the more they sell, the more they lose; third, there are too many outlets and too close, resulting in shopping for the same brand in the same city.

44 companies with revenue exceeding 10 billion yuan Guang Hui leads the way with 166.2 billion yuan in revenue.

According to the data, Guanghui Motor reached 166.17 billion yuan in revenue in 2018, an increase of 3.4 percent over the same period last year, and a net profit of 3.26 billion yuan belonging to the owner of the parent company, down 16.3 percent from the same period last year. Among them, "vehicle sales" was the main source of revenue of Guanghui Motor last year of 142.67 billion yuan, accounting for 85.9% of revenue.

As for offline stores, by the end of 2018, Guanghui Motor had operated 839 stores, an increase of 47 from the end of 2017; operating stores included 777 4S stores, including 221 with luxury brands and ultra-luxury brands.

Zhongsheng Group, the runner-up in the list, reported revenue of 107.735 billion yuan for the whole year, an increase of 24.9 percent over the same period last year, and a net profit of 3.695 billion yuan, an increase of 6.3 percent over the same period last year. By the end of 2018, the total number of Zhongsheng Group dealerships had increased to 318, including 175 luxury brands and 143 high-end brand dealerships.

In the earlier Xi'an Mercedes-Benz rights incident in the whirlpool of public opinion, in 2018 to achieve business revenue of 82.996 billion yuan, the total sales reached 240000 vehicles. In addition, due to operational problems, the operating income of the huge group in 2018 was 42.034 billion yuan, down 40.37% from the same period last year; the net profit attributable to the shareholders of listed companies was a loss of 6.155 billion yuan, down 3003.23% from the same period last year. After selling some 4S stores to ease the financial difficulties, by the end of 2018, there were 806 outlets nationwide, 229 fewer than at the end of 2017. There are 563 4S stores.

In addition to the above three, Among the top ten dealer groups, there are 69.518 billion yuan in revenue from Shanghai Yongda Group, 54.136 billion yuan from Hengxin Automobile Group, 44.579 billion yuan from Dachang Group, 44.253 billion yuan from Guoji Automobile Group, 43.208 billion yuan from Zhejiang Yuantong Automobile Group. Huge group 42.034 billion yuan, Jiangsu Wanbang gold star 40.079 billion yuan. A total of 44 dealer groups in 2018 revenue of more than 10 billion yuan.

The reporter noted that last year, some dealer groups were seeking business upgrading and transformation, from heavy sales to heavy service transformation, in which used cars, auto finance and other derivative businesses have become the focus of dealer business transformation. Some dealer groups reported a significant increase in used car sales, with Guanghui Motor up 48.88% in 2018 and Yongda up more than 20% in 2018 compared with the same period last year.

Increase in income, no increase in profit, nearly 40% of dealer net profit loss

Since 2019, China's automobile market is changing gears from high-speed growth to high-quality development, and automobile dealer groups have also accelerated the evolution process from sellers to service providers. Shen Jinjin believes that "the era of high growth in the auto market is over, the normal future is that positive growth and negative growth will coexist, dealers will face a reshuffle, or will need to change their minds and management to get through the cold winter."

According to the 2018 Automobile Dealers Survival Survey released by the China Automobile Circulation Association, the gross profit of new cars among dealers fell to 0.4 percent in 2018 from 5.5 percent in 2017. Dealer losses rose to 39.3% from 11.4% in 2017. In 2019, this situation has not been improved, dealers' new car gross profit is generally negative, the loss area is further increased.

At the same time, dealer inventory has always been high. The circulation association survey data showed that the average inventory coefficient of dealers in the 12 months of 2018 was 1.73, higher than the early warning line of 1.5; in May 2019, the dealer inventory early warning index was 54%, still above the warning line. It is understood that at present, the inventory of the whole industry is as high as more than 3 million vehicles, equivalent to 2 months of sales, and the amount of capital occupied by the inventory in the circulation link is as high as 500 billion yuan.

For this reason, the circulation association appealed to the manufacturers to change the way of thinking, change "production and sales" to "sales", and reach a consensus on reasonable inventory at the same time.

It is worth mentioning that, in order to ensure new car sales, car dealers are also testing the car new retail, online and offline dual channel layout, sales channels and methods are constantly changing. In this regard, Shen Jinjin believes that the Internet will become a new tool for dealer group sales, or will help dealers to maintain sales growth.

In addition, the auto finance business also shows growth potential. In 2018, the revenue of Guanghui Auto Finance reached 260 million yuan, an increase of more than 20% over the same period last year, and Yongda Automobile's auto finance business also grew by more than 20% in 2018. Zhengtong Motor's financial services business earned about $840 million in interest and services in 2018, an increase of 61.7 per cent over the same period last year.

Key Words:  Car  Guanghui car  SUV