On September 23, the China Automobile Dealers Association published a post on its official account stating that in recent times, the China Automobile Dealers Association has received feedback from a large number of member companies that the drastic changes in the automobile market caused by factors such as the ongoing "price war" have caused automobile dealers to be stuck in a quagmire and face the prominent problem of extremely tight liquidity.
The association immediately carried out extensive research and analysis to fully reflect the current financial difficulties and closure risks faced by automobile dealers as much as possible. Recently, the association also formally submitted the "Emergency Report on the Current Financial Difficulties and Closure Risks Faced by Automobile Dealers" (hereinafter referred to as the "Report") to the relevant government departments, analyzing the problem of the current tight capital chain faced by automobile dealers, which has led to a sharp increase in the risk of closure, and proposing relevant policy recommendations, timely reflecting the real problems of automobile dealers, and providing an effective basis for government decision-making.
The report pointed out that: At present, auto dealers are experiencing large-scale losses in new car sales, and there is a widespread situation of cash flow deficit operation and increased risk of capital chain rupture, which makes it difficult to escape the dilemma of survival. There are two major problems facing the current stage: First, the dual pressure of sluggish consumption and wholesale volume of manufacturers has kept dealers' inventory at a high level. In order to reduce capital pressure and financing costs, dealers are forced to sell at low prices to survive; second, the "price war" has caused a serious inversion between purchase and sales. The more dealers sell, the more they lose. At the same time, they are facing the pressure of difficulties in fulfilling financing contracts when they expire. Dealers are facing a cut-off in operating funds and a sharp increase in the risk of capital chain rupture. At present, the maintenance time of dealers' existing working capital has been compressed to the limit. According to the association's "Market Pulse" monitoring data, as of August this year, the highest inversion of dealers' purchase and sales has reached -22.8%, which has further expanded by 10.7 percentage points compared with the same period last year. According to the relevant data analysis of experts from the association, in August, the overall discount rate of the new car market was 17.4%. From January to August this year, the "price war" has caused a cumulative loss of 138 billion yuan in the overall retail of the new car market, which has had a great impact on the healthy development of the industry.
Since the beginning of this year, the media has repeatedly reported news about the "explosion" of domestic auto dealers, both national and regional dealers. It is understood that the reasons for the "explosion" are mostly due to liquidity issues, which have no direct relationship with the dealers' own operations. The break in the capital chain eventually led to the shutdown of the company. The association believes that the current automobile market has entered the stage of stock market, and circulation efficiency has become an important aspect of improving the overall operating efficiency of the national economy. The automobile circulation industry is a capital-intensive industry with a high proportion of private enterprises. Financial stability means active circulation. Further improving the ability of financial services to guarantee circulation, especially increasing financial support for the development of private dealers, is of great significance to expanding automobile consumption, upgrading the automobile industry and building a new development pattern of "dual circulation".
The association calls on relevant government departments to pay close attention to the current financial difficulties and closure risks faced by the automobile dealership sector, and to decisively adopt phased financial relief policy measures to effectively prevent the occurrence of systemic risks in the automobile dealership sector. We urge relevant departments to take action as soon as possible to study and introduce phased financial relief policy measures in the automobile dealership sector, including: First, relevant departments should organize special research on the financial environment in the automobile dealership sector as soon as possible, sort out the financial needs of the top 100 automobile dealer groups, regional leading dealer groups and small and medium-sized automobile dealers, study and formulate financing support policies in the automobile dealership sector, and guide financial institutions to increase support for the automobile dealership sector under the premise of compliance with laws and regulations and controllable risks, so as to further enhance the function of financial service circulation; Second, financial institutions and automobile dealers should jointly promote the stability of the automobile market, not withdraw existing loans, not continue loans, and not suppress loans, and allow flexible extensions and continuations. At the same time, gradually increase the credit line for dealers and broaden the scope of loan use. Policy banks are encouraged to establish special credit policies for automobile dealers.
In the next step, the association will work together with industry enterprises and member units to meet the challenges. At the same time, it will actively cooperate with relevant government departments to conduct industry research and reflect members' demands, helping the majority of automobile dealers to overcome difficulties and create a better future.
Source Guancha
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