China Grand Automotive Services Group warns of risks stating that if the company's stocks have a closing price below 1 yuan for 20 consecutive trading days, the stocks may be delisted from the Stock Exchange. In 2022, the net income attributable to the parent company suffered a huge loss of 2.67 billion yuan, but it made a profit of 392 million yuan last year, but the net margin has dropped to 0.46%.
June 26th, by rounds and rounds of "price wars", car dealer groups generally fall into the dilemma of losses. On June 26th, the A-share listed company, China Grand Automotive Services Group, continued to halt trading, reporting 0.64 yuan, followed by a limit up, but the company's share price has fallen below 1 yuan for 5 consecutive trading days.
According to exchange regulations, if a stock appears as 'closing stock price on 20 consecutive trading days being below RMB 1', the company's stocks and convertible bonds will be delisted due to mandatory delisting of trading. On June 20th, China Grand Automotive Services Group's stock price hit the lower limit, dropping below the 1 RMB 'red line.' At that time, China Grand Automotive Services Group warned of the risk that if the daily closing price of the company's stock remains below 1 RMB for 20 consecutive trading days, the company's stock may be delisted from the exchange.
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"It is mainly due to the slow recovery of car consumption during the reporting period, the decline in the profitability of the automobile as a whole due to the impact of industry price wars, and the squeezing of traditional fuel vehicles by the new energy vehicle market has led to a decline in revenue but relatively rigid costs which cause operating profits to plummet." explained China Grand Automotive Services Group.
The current situation of China Grand Automotive Services Group is the true reflection of the development of the industry. According to the "2023 National Automobile Dealership Survival Survey Report" released by the China Automobile Dealers Association, only 27.3% of dealers achieved their annual sales targets in 2023, and the proportion of dealers’ losses was as high as 43.5%. The survival dilemma of dealers is not only reflected in the industry report, but also in the financial reports of leading dealer groups. Incomplete statistics from annual reports in 2023 show that "increased revenue but not increased profit" has become the current situation in the industry. Among them, Zhongsheng Group, as the industry "leader", had a year-on-year decline in net profit of 24.70% in 2023, while Yongda Auto, Meidong Auto, Sunfonda Group, and Baideli Holdings saw a year-on-year decline in profit of more than 60%. "In 2023, the domestic economy is gradually recovering under continuous pressure, and the overall vehicle market is warming up. However, the automobile consumption market is still affected by multiple factors. Major auto companies are engaged in a price war to compete for market share, and the discount on new car prices continues to increase. Dealers are forced to maintain supply by reducing prices, with high inventory and enormous pressure." stated China Grand Automotive Services Group in the 2023 performance forecast.
On June 25th, the China National Association of Automobile Dealerships and Commercial Vehicle Business Societies released the "2023 Automobile Dealership Satisfaction Survey and Auto Dealership Survival Report" which showed that the satisfaction rate of dealers with the host plant in 2023 was 56.1%, a significant drop from 64.8% in 2022, and the lowest in years. "From the situation reflected after the survey, low satisfaction, low return on investment, and lack of confidence are relatively prominent for dealers." said Xing Haitao, the secretary and secretary-general of the All-China Vehicle Business Party.
"At present, the direct operation mode widely used by new energy brands has to some extent impacted the traditional distribution model of dealers." Industry insiders believe that with the impact of the "price war" on the automobile distribution industry, the profit margin of dealers has been further compressed, and the pressures of funds and operations have increased, leading to increased operating pressure and risk." said the article.
Liu Yingzi, the president of the China National Association of Automobile Dealerships and Commercial Vehicle Business Societies, said at the China Automobile Distribution Industry Conference on June 25th that since the beginning of this year, the positive factors in China's economic operation have been accumulating, and the momentum of growth has been continuously strengthening. The national economy has continued to recover and improve, and China's automobile industry development has also maintained a growth trend. However, the market competition that focuses on price as the main means is still continuing, and the state of excessive overlap in the industry is still intensifying. Under the various influences, such as the automobile price inversion and the decline in brand sales volumes, the operation of many auto companies is under enormous pressure and anxiety is spreading.