On October 9, a notice from Ping An Bank was disclosed, requiring an internal risk investigation on the upstream and downstream industrial chains of Cheetah, Zhongtai, Huatai and Lifan automobile companies. The reason is that, according to a media report, the four companies will enter bankruptcy proceedings at the end of the year, and the total bad debts related to the upstream and downstream auto parts supplier industrial chain are estimated to be about 50 billion yuan.
The rumor that four auto companies went bankrupt was disproved
One stone stirred up a thousand waves. On October 10th, four automobile companies rumored bankruptcy became a hot topic in the industry. Then, the related enterprises quickly dispelled rumors.
Zhongtai Automobile told TIME Finance and Economics that the news was false and would reserve the right to pursue legal liability for those who continue to spread rumors. Later, Zhongtai automobile official also issued the clarification notice, saying that the companys current production and operation are normal, there is no insolvency into the bankruptcy proceedings, and there is no information that should be disclosed but not disclosed. Zhongtai also listed the companys assets in the announcement. As of the first half of the year, the total assets and liabilities of the company were 30.531 billion yuan and 13.241 billion yuan respectively.
Lifan shares also issued a public announcement saying that Lifan vehicles mentioned in media reports will enter bankruptcy proceedings at the end of the year, which has been verified to be untrue; so far, the company has no bankruptcy plan. At present, the company has high liabilities and high liquidity pressure. According to the current situation of Chinas automobile industry, the future development may face challenges. The company will also actively take various measures to reduce risks.
Tian Yongjun, Secretary of the general Party branch and deputy head office of cheetah automobile sales headquarters, also denied the rumors of bankruptcy in an interview with the media, saying that the report was untrue and the company was negotiating with each other. Tian Yongjun said Cheetah Automobile did not go bankrupt, never thought of going bankrupt, and never applied for bankruptcy. The company is currently trying to grasp the production and operation, for the related picture information, Tian Yongjun said someone has ulterior motives.
As the other party involved, Ping An Bank responded that it was a regular risk management action to conduct regular or irregular risk screening on existing customers according to the macro-economic situation, industry, business changes and other information.
So far, the truth has come to light, and the bankruptcy of four car companies at the end of the year is a rumor.
Four car companies are in deep trouble behind the rumors
But there is no wind without waves. Behind the industry is the first time that Chinas automobile market has entered a negative growth downturn in 28 years. As the pillar of the local economy, the whole vehicle factory is also connected with many upstream and downstream enterprises, leading the whole body. On the other hand, after the downturn of Chinas auto market, the above four auto companies are indeed struggling, and their operating conditions are very difficult.
On the evening of Oct. 9, the Dawning Stock Announcement of the listed company said that all the shares held by Huatai Automobile were frozen by the judiciary for three years. Prior to that, Huatai Autos ownership of Dawning shares has been frozen on a number of occasions. Whats more, in September this year, the Peoples Court of Tianjin Binhai New Area disclosed a property investigation into Huatai Automobile Group Co., Ltd., a company that once invested billions of dollars, and now has only 130,000 yuan in bank deposits on its books.
Lifan automobile is also difficult, especially in the second half of the year, it is basically in a semi-shutdown state. The monthly production of passenger cars is only a few hundred, and the production and sales have fallen sharply year-on-year. The data show that in the first eight months of this year, Lifan sold about 216,000 traditional passenger cars, down 68.94% year-on-year. In addition, Lifan is also deeply involved in debt litigation. According to Lifans announcement, the cumulative amount of litigation (Arbitration) involved in the past 12 months that has not been disclosed by Lifan has reached 1.423 billion yuan.
Similarly, as a 70-year-old company, Cheetah sold only 76,600 cars in 2018, nearly halfway down from the previous year, and its total sales fell to 28,000 in the first half of 2019. In August this year, Cheetah Automobile, in an internal meeting summary document, showed that in view of the serious loss of production and operation, the meeting through salary adjustment, burden reduction and wage reduction, to ensure survival. The salary adjustment includes 50% salary reduction for some senior managers at headquarters, 10% - 50% salary reduction for research institutes and 30% - 50% salary reduction for employees at production bases.
And once the Shanzhai network Hongzhongtai automobile, has also come to the bottom of the business. In the first half of this year, sales of 638,000 vehicles, net profit of 290 million yuan, down 195.37% year on year. At the same time, Zhongtai is also deeply involved in the negative reports of dealersrights protection company salary arrears. In September this year, a news that many Taijunma people went to the building empty and went bankrupt triggered a heated discussion in the industry. According to Auto Commune, Junma automobile is about to be acquired by Sany Heavy Industry, which is mainly engaged in construction machinery and equipment.
Where do marginal car companies go?
It is worth mentioning that the four automobile enterprises affected by the bankruptcy rumors are only the epitome of the current automobile industry. At present, there are more than four automobile enterprises facing business problems.
It is an indisputable fact that among the more than 60 independent brands, only 10 of them exceeded 100,000 in sales in the first July, including Weichai Yingchi, Dongfeng demeanor, Najijijijie, BiSpeed, FAW Senya, Kairui and other independent brands, and the total sales were less than 10,000.
For the automotive industry which depends on scale profit, the annual sales of 100,000 vehicles is generally recognized as the break-even line in the industry. With the transformation and upgrading of the automobile industry, the market logic of the strong will be more distinct, and the living environment of the marginal automobile enterprises will only be worse and worse.
Cao He, secretary-general of the National Federation of Industry and Commerce Automobile Chamber, told TIME Finance and Economics that under the industrial phase-out and upgrading, the fate of the marginal automobile companies waiting for restructuring is likely. Some people accept the best, if not, only bankruptcy. Looking back at the end of next year, there will be more than four recently nominated by the media.
In fact, there are already enterprises on the road of restructuring. Shortly before the National Day, FAW Xialis joint venture with Bojun Auto, a new auto maker, just announced its landing. FAW Xiali invested 505 million yuan in assets and liabilities related to the whole vehicle, such as land, factory buildings and equipment, in exchange for only 19.9% of the equity of the new joint venture.
Coincidentally, on August 16, Jiangling Group, Changan Automobile and Aichi Automobile held a joint venture announcement ceremony for Jiangling Group, Changan Automobile and Aichi Automobile to announce the establishment of Jiangling Holdings Co., Ltd. According to the content of the agreement, Echi will invest 1 billion yuan into the registered capital of Jiangling Holdings. After the completion of the capital injection, Echi, Jiangling and Changan will reorganize Jiangling Holdings Group with 50%:25%:25% equity ratio respectively.
Searching for the reorganization of Panxia has become the last struggle of marginal automobile enterprises.
Although the rumors of bankruptcy of four car companies have been clarified, and no car company has really gone bankrupt at present, but the times are turbulent, and after the end of the era of savage expansion of cars, nude swimmers will eventually be eliminated.
Source: Times Financial Author: Li Yang Responsible Editor: Wang Honggui_NF7326