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 a clarification announcement, saying that the companys current production and operation is normal, there is no insolvency into 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.
As the other party involved, Ping An Bank responded that the bank regularly or irregularly carries out risk checks on its stock customers based on macroeconomic conditions, industry and business changes and other information, which is a conventional risk management action.
Four car companies are in deep trouble behind the rumors
But there is no wind, no waves, all the grass and trees in the industry behind, is the first time in 28 years that Chinas car market has entered a downturn of negative growth. As the pillar of the local economy, the whole car factory also links up many upstream and downstream enterprises, and affects 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 lawsuits. According to Lifans announcement, the cumulative amount of litigation (arbitration) involving Lifans shares that have not been disclosed in the past 12 months has reached 1.423 billion yuan.
Similarly, as an old brand enterprise with a history of 70 years, cheetahs sales volume in 2018 was only 77600, nearly halved year-on-year, and the cumulative sales volume in the first half of 2019 fell to 28000. 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 is the marginal car company going?
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.
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 automobile companies have been clarified, and no automobile company has really reached the point of bankruptcy at present, the naked swimmers will eventually be eliminated after the end of the era of brutal expansion of automobiles.
Source: Times Financial Author: Li Yang Responsible Editor: Wang Honggui_NF7326