The financial results of automobile enterprises in the first half of 2020 have been released one after another. Under the impact of the epidemic, most automobile enterprises experienced a sharp decline in both revenue and profit during the reporting period. For example, the most profitable SAIC group, its first-half revenue and net profit attributable to mother were 283.74 billion yuan and 8.394 billion yuan respectively, down 24.60% and 39.01% year-on-year respectively.

      Under pressure, Great Wall motor and Geely Automobile successively lowered their performance targets: Great Wall Motor lowered its full-year sales target in 2020 to 1.02 million units from 1.11 million units previously, and its net profit was lowered to 4.05 billion yuan from 4.7 billion yuan previously; Geely auto's target was lowered by about 6% to 1.32 million vehicles from 1.41 million.

      If that is the case with carmakers, what about dealers who share the same fate and are less resilient to pressure and risk?

The head distributor group has weathered the epidemic

       In the semi-annual report of 2020 released by China Grand Auto on August 29, the operating income of the company reached 66.076 billion yuan during the reporting period, down 18.1% year-on-year. Net profit attributable to mother was 501 million yuan, down 66.8 percent year on year. Its report showed that in the first quarter, the group had a loss, until the second quarter net profit turned into a full.

       As the largest auto dealer group in China, China grand auto has hundreds of auto sales outlets across the country, with Evergrande group as the shareholder behind it. Its anti-risk ability ranks the first in the industry.

     However, faced with the double pressure of the downward auto market and the epidemic situation, China Grand Auto still made the decision to issue bonds to supplement cash flow. In July this year, China Grand Auto was approved by China Securities Regulatory Commission to issue convertible bonds with a total face value of 3.37 billion yuan.

     Zhongsheng holdings, the country's second-largest car dealership group, reported first-half revenue of Rmb58.203bn, up 1.4 per cent from a year earlier. Net profit attributable to mother was 2.29 billion yuan, up 10.1 percent year on year.

     In addition, the operating income in the first half of the year was 18.291 billion yuan, a year-on-year decrease of 31.49%, and net profit attributable to mother was 224 million yuan, a year-on-year decrease of 45.03%.

      As can be seen from the sales data disclosed by various automobile brands, sales recovered in the later period of the epidemic, among which luxury brands recovered the earliest. As a result, luxury automobile dealers emerged from the haze of the epidemic earlier.

      According to the semi-annual report released by The company, affected by the epidemic, the sales volume of new cars in the first half of the year was 14,613, down 5.5% from the same period last year, resulting in the main business income of 5.754 billion yuan, down 2.3% from the same period last year. Net profit attributable to mother was 234 million yuan, down 18% from a year earlier.

Capital chain rupture crisis is imminent

      As is known to all, the automobile dealer industry has a large amount of working capital, while the profit of new car sales is declining year by year. Traditional automobile dealers tend to bury huge hidden dangers when developing smoothly. Giant companies that look like giant towers are likely to collapse at the drop of a straw.

      Last year, as the first listed dealer group in China, the huge group had a crisis. It sold a number of highly profitable 4S stores to save itself, and then reorganized and introduced new investors to save the company. Now there are many dealers follow its footsteps, the first is rundong car.

      Rundong Auto recently announced that the company received a notice that due to the overdue payment of the creditor RMB 1.659 million and interest, the creditor has filed bankruptcy reorganization application to xuzhou Intermediate People's Court of Jiangsu Province on August 20, 2020 for affiliated Rundong Auto Group Co., LTD.

     Rundong Is facing heavy losses after the company revealed a sharp drop in revenue of between 1.4 billion yuan and 1.5 billion yuan in the first half of this year, with a net loss estimated at between 213 million yuan and 313 million yuan.

At the same time, another big car dealership group is in serious debt trouble.

       Zhengtong Auto has issued a profit warning, predicting that the group's shareholders should account for no less than 1.331 billion yuan of losses for the six months ending June 30, 2020, compared with the company's profit attributable to shareholders of about 471 million yuan in the same period in 2019.

     Serious losses have led to frequent debt problems of Zhengtong Automobile. Recently, many consumers have been unable to pick up their cars after they have paid the full amount. The reason explained by the dealers is that the group's capital chain has broken and they cannot redeem the pledged vehicle certificate from the bank.

      Zhengtong Motor is said to be interested in selling a 29.9 percent stake to Xiamen International Trade Holding Group Co.

Eighty percent of dealers reported negative sales growth

       According to the research of China Association of Automobile Dealers, the pressure of survival of automobile dealers will increase in 2020, and the automobile consumption market will show a sharp decline, with many dealers in the state of loss. The profitability of traditional dealer business declined, new car sales were poor, after-sales revenue was only 41.5% of last year's annual revenue, and after-sales gross profit margin declined slightly.

      The survey results show that in the first half of 2020, only 21.5% of the dealers achieved positive sales growth, and more than 30% of the dealers saw sales decline by more than 30% compared with the same period last year.

      According to the data released by the China Association of Automobile Dealers, in the first half of 2020, the total number of domestic passenger car dealers was 29,773, down 0.7% from the end of 2019.

     In the second half of the year, the downward pressure on the car market has not eased. Meanwhile, as the controlling party of the sales channel, the automobile enterprises are expanding new channels under the trend of new retail. With the new and old pressure coming at the same time, how long can the automobile dealers support?