The impact of the epidemic on the automotive industry has gradually spread to all segments, while the automotive distribution industry has become more "vulnerable" under the impact.

By the extension of the Spring Festival holiday and some cities to postpone the resumption of work and other factors, auto sales, leasing and after-sales service showed a precipitous drop, although some car dealers have taken the "offline to online" strategy, but the overall volume has been with the weekdays can not be compared. A series of chain reaction, resulting in some dealers operating back to the flow, the enterprise is facing performance difficulties, the industry's short-term liquidity impact is huge.

Recently, China Association of Automobile Dealers (CAAD) formally submitted the "Emergency Report on Financial Service Support for Dealers of Automobile Dealers during the Epidemic Prevention and Control Period" (hereinafter referred to as the "Report") to China Banking and Insurance Regulatory Commission (CBIRC), Ministry of Commerce (MOFCOM), and other relevant governmental authorities, imploring the competent governmental authorities to give the industry The report urges the government authorities to provide the industry with phase-in policy support.

Dealers' liquidity risk surges

Due to the epidemic, more than 25 provinces and municipalities across the country have announced that the start date of enterprises in non-essential industries has been delayed to February 10th, and to February 14th in Hubei Province. According to a survey by the China Automobile Dealers Association, most auto dealers are currently shut down.

Photo credit: China Automobile Circulation Association

Recent data shows that the auto consumption index in January 2020 was only 27.5, China Automobile Circulation Association said, the epidemic caused the delay of the resumption of work in the regions, and the decline in disposable income of the residents, which inhibited the consumption of automobiles, and the automobile circulation industry belongs to the industry that relies on the liquidity of funds more, in this context, some of the Automobile dealers have already experienced difficulties in operating repayment and fulfillment.

China Automobile Circulation Association (CACA) judges that the automobile circulation industry, as an intermediate link connecting automobile manufacturing and social consumption, will have an impact on the economic goals and employment stability of the whole society in the event of a systemic risk.

Therefore, the Association puts forward a number of proposals to the government authorities to give automobile dealers stage-by-stage policy support during the epidemic prevention and control period, specifically including: calling for the strengthening of the supervision of financial institutions to provide policy protection to the distressed enterprises, and providing automobile circulation enterprises with the convenience of approval of debt extension, increasing the credit line, accelerating the efficiency of lending, reducing the cost of financing, and reducing and waiving the overdue penalties and interest rates in special cases and the related policy support, such as the protection of creditworthiness. The company has also been providing policy support to automobile circulation enterprises, such as facilitating the approval of debt extension, accelerating the efficiency of credit, reducing the cost of financing, reducing overdue penalty and interest in special cases, and credit protection.

Photo credit: China Automobile Dealers Association

In fact, the impact of the epidemic on the automobile distribution industry is not only limited to the level of liquidity. on February 7, the latest issue of China's automobile dealers' inventory warning index was released, January's automobile dealers' inventory warning index of 62.7%, an increase of 6.3 percentage points compared to the same period in the year-on-year rise of 6.5 percentage points, the inventory warning index has been located in the alarm line. The inventory warning index is already above the warning line.

Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, said the index does not fully reflect the impact of the epidemic on the automobile dealers because two-thirds of the questionnaires were collected before the outbreak.

Automobile dealers generally reflected that the epidemic will have a greater impact on the market in February, with sales falling by more than 50 percent year-on-year and even more so sequentially. If some provinces fail to start work as scheduled on Feb. 10, the cumulative year-on-year decline in auto sales from January to February is expected to reach about 20 percent.

Industry collaboration to reduce burden for dealers

Before the China Association of Automobile Circulation (CAAC) issued its appeal to government departments, initiatives to reduce pressure on dealers have been gradually launched within the industry.On Feb. 4, the Jiangsu Automobile Circulation Association (ACCA) issued an "Open Letter to Branded Automobile Suppliers (OEMs)" calling on OEMs to effectively respond to dealers' concerns and demands by canceling the dealers' recent sales The task and target assessment, reduce the annual sales target, extend the period of financial subsidies, timely issuance of rebates and subsidies, to win the epidemic prevention and control of the blocking war to provide strong support.

In fact, some car companies have already made relevant initiatives.

For example, Volvo said that in consideration of the operational pressure brought by the epidemic to dealers, it has relaxed its performance appraisal and does not set a sales target for February, and at the same time, in order to further alleviate the financial pressure on dealers, Volvo has also provided a total of more than 10 million yuan in personnel subsidies for dealers' staff.

GAC Motor, for its part, has separately assessed dealers for burden reduction and financial burden reduction. In terms of financial burden reduction, for vehicles that need to redeem certificates at the expiration of dealer financing and repayment, GAC will actively coordinate with financial institutions for special treatment and provide inventory financing discount support, adding an additional 30-day interest-free period to reduce the burden of dealers' capital flow.

Meanwhile, GAC Motor also encourages dealers to explore new sales models and channels. Ltd. predicted that under the background of rapid development of Internet+, big data, AI technology, 5G communication, etc., the new automotive retail model, which focuses on online experience, car selection and car purchase, may usher in development opportunities during this period. Meanwhile, the outbreak will also give rise to the upgrading of the automotive after-sales service model, but many small and micro-service enterprises have a tougher survival environment, and under the influence of the outbreak will even face the risk of being eliminated.

Source: the first electric network

Author: car capital

This article comes from the authors of the automotive home car home, does not represent the views of the automotive home position.