Chinese Automobile Dealers Association Appeals for Government Support Amidst Dealer Capital Difficulties
TapTechNews September 23 news, the China Automobile Dealers Association issued a document today. Regarding the problem of dealer capital chain rupture caused by the price war, it appealed to the government departments and submitted an emergency report.
The China Automobile Dealers Association said that in the recent period, the association received a large number of reports from member enterprises, indicating that the continuous price war and other factors brought about by the violent changes in the auto market have made auto dealers mired in a quagmire, facing extremely severe problems of capital liquidity, and the association then carried out extensive research and analysis work.
Recently, the China Automobile Dealers Association also officially submitted to the relevant government departments the Emergency Report on the Current Situation of Capital Difficulties and Shutdown Risks Facing Automobile Dealers (hereinafter referred to as the Report) accordingly, analyzing and putting forward relevant policy suggestions on the problem that the current general capital chain tightness of automobile dealers leads to a sharp increase in shutdown risks, and timely reflecting the realistic problems that automobile dealers are urgently worried about.
The Report pointed out that the new car sales of current automobile dealers have suffered large-scale losses, and there is generally a situation of high cash flow deficit operation and an intensified risk of capital chain rupture, and it has been difficult to get out of the survival dilemma. The two main problems at this stage:
One is that the dual pressure of sluggish consumption and the manufacturer's wholesale volume makes the dealer inventory remain at a high level. In order to reduce the capital pressure and financing cost, dealers are forced to sell at a low price to survive;
Two is that the price war makes the purchase and sales upside down seriously, dealers lose more when they sell more, and at the same time face the pressure of difficulty in fulfilling the financing due date, dealers face a cutoff of operating payment collection, and the risk of capital chain rupture increases sharply.
The Report mentioned that the existing working capital of dealers has been compressed to the limit at present. According to the Market Pulse monitoring data of the China Automobile Dealers Association, as of August this year, the highest dealer purchase and sales upside down data has reached -22.8%, which has further expanded by 10.7 percentage points compared to the same period last year. According to the relevant data analysis of the association experts, 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 a greater impact on the healthy development of the industry.
TapTechNews noticed that since this year, the explosion news of domestic auto dealers has been repeatedly reported, including both national and regional dealers. The Report pointed out that the reason for the explosion mostly lies in the problem of capital liquidity, and has nothing to do with the dealer's own operation directly, and the rupture of the capital chain eventually led to the suspension of the enterprise.
The China Automobile Dealers Association believes that the current auto market has entered the stock market stage, and the circulation efficiency has become an important aspect to impr ove the overall operating efficiency of the national economy. The auto circulation industry is a capital-intensive industry and the private enterprises account for a relatively high proportion. Financial stability means active circulation. Further improving the financial service guarantee ability for circulation, especially increasing the financial support for the development of private dealer enterprises, is of great significance for expanding auto consumption, upgrading the auto industry and building a dual circulation new development pattern.
The China Automobile Dealers Association appeals that the relevant government departments can pay high attention to the current capital difficulties and shutdown risks faced in the field of auto distribution, and resolutely adopt phased financial relief policy measures, effectively preventing the occurrence of systemic risks in the field of auto distribution. Earnestly request the relevant departments to take action as soon as possible and study and introduce phased financial relief policy measures in the field of auto distribution, including:
First, the relevant departments should organize a special investigation on the financial environment in the field of auto distribution as soon as possible, sort out the financial needs of business entities such as the top 100 auto dealer groups, regional leading dealer groups and small and medium-sized auto dealers, study and formulate financing support policies in the field of auto distribution, and guide financial institutions to increase support for the field of auto distribution under the premise of complying with laws and regulations and controllable risks, thereby further enhancing the function of financial services for circulation.
Second, financial institutions and auto dealers work together to stabilize the auto market, do not withdraw loans, continue loans or reduce loans for existing loans, allow flexible extensions and continuations, and at the same time, gradually increase the credit line for dealers and broaden the scope of loan use. Encourage policy banks to set up special credit policies for auto dealers.
According to public information, the China Automobile Dealers Association CADA (China Automobile Dealers Association) is a national social organization in the field of auto circulation composed of various types of enterprises and related scientific research institutions, social organizations, and individuals engaged in the operation of auto sales, used car trading, auto clubs, auto decoration and beauty and supplies, car rental, auto parts, motorcycles and accessories, etc., without being restricted by departments and regions.