The Knockout Race Is Coming: Where Will The Edge Independent Brand Enterprises Go?

After the eleven long holiday in 2019, the "golden nine silver ten" car consumption climax did not give the Chinese car market "warm" in advance. In spite of the fact that car companies have issued a "sharp report" for the growth of cars, but so far, most of the car sales have been "defeated" compared with the same period last year, except for the Great Wall cars.

In October 9th, an internal mail from Ping An Bank brought the four car companies of cheetah, Zhongtai, Huatai and Lifan to the "bankruptcy" point of view. There are also many brands that are hovering around the edge of life and death.

The mail said: "cheetah motor, Zhongtai automobile, Huatai Automobile, Lifan automobile four car enterprises will enter bankruptcy proceedings at the end of the year, it is estimated that the upstream and downstream auto parts suppliers industry chain total about 50 billion yuan bad debts."

Subsequently, car companies have refuted rumors: Lifan said that the news was nothing, and Zhongtai said it had reported it to the public security department. Ping An Bank responded only to regular checks.

In fact, before the information was sent out, the four enterprises were negative for many times this year. Despite the end of the hearsay, it reflects the downside of the auto market as a whole, such as declining sales of its own brands, operating losses and high liabilities.

"The negative growth of the automotive market this year is a foregone conclusion." In October 10th, in the China Automotive Industry Development Report (2019) (2019 auto Blue Book) press conference, Fu Yuwu, honorary chairman of the China Automotive Engineering Society, said that the elimination of car market has already started. At present, not only some domestic automobile manufacturers and parts manufacturers, but also the individual multinational car companies are facing the elimination.

"Without the support of scale production and technology and platform, too many manufacturers can only cause industrial overproduction." Fu Yuwu said.

In October 14th, the monthly sales data released by the China Automobile Industry Association showed that in September this year, China's automobile production and sales volume was 2 million 209 thousand and 2 million 271 thousand respectively, down 6.2% and 5.2% respectively compared with the same period last year. In 1-9 months, the sales and sales of 18 million 149 thousand vehicles and 18 million 371 thousand vehicles decreased by 11.4% and 10.3% compared with the same period last year.

The turning point of the car market has arrived. The enterprises with weak foundation and over reliance on policies and those who do not attach importance to technology research and development are most likely to go to the edge of life and death. The four enterprises in the whirlpool are more vulnerable to crises.

Public figures show that in the 1-8 month of this year, the total sales volume of Zhongtai automobile was 124 thousand and 400, down 32.3% from the same period last year. In addition, in the first half of this year, the revenue of Zhongtai automobile was only 5 billion 40 million yuan, down 50.83% compared to the same period last year. The net profit attributable to shareholders of listed companies was -2.9 billion, down 195.37% compared with the same period last year.

Cheetah cars and Lifan cars are getting worse. As of August, cheetah sold only 30951 cars, almost all of the main vehicles crashed; the sales volume of Li Fan before August dropped by over 80%; in the first half of this year, the net profit of Lifan shares dropped from 125 million yuan in the same period last year to -9.47 billion yuan.

And the problems facing Huatai, which have not yet been voiced, may be even more serious. Most shops in Beijing have been closed or no longer sold Huatai motor. A shop with Huatai car sales has been converted into other brand 4S stores, and its Huatai car sales are produced in 2017.

As the former Secretary General Cui Dongshu said, "auto manufacturers are facing more and more pressure. The decline in car sales may accelerate the process of disqualification of some unqualified companies, some of which may be withdrawn from the market next year."

Where is the edge car company going?

The so-called elimination means withdrawal from the market, which means that enterprises withdraw from the whole vehicle manufacturing industry, more of which means that vehicle enterprises no longer engage in vehicle production and manufacturing business. However, after the company has withdrawn, it can still choose to produce auto parts and other related products, to OEM or sell assets to other enterprises. In October 13th, a car expert who asked not to be named said in an interview with reporters.

In the opinion of the experts, because China implements the qualification management for automobile enterprises, even if the car companies stop production, the relevant production qualification will be retained. The existing investment and access management regulations also give enterprises the opportunity to "rebirth".

"Based on the current situation in China, it is more difficult for new car manufacturers to acquire qualifications, and the qualification of making cars is more valuable. The subsequent operation of bad automobile enterprises can start again through the introduction of new investors. The experts pointed out.

Some new forces also choose to obtain production qualification through holding the "zombie enterprise" curve. For example, wal Mae acquired the qualification of passenger car and commercial vehicle production and transferred it to its own Wenzhou factory by holding Zhong Shun Automobile. The cost of 800 million was 100% of the cost of Tianjin FAW Huali Automobile Co., Ltd.

Of course, in addition to the transfer of production qualification, it is not uncommon to get a "rebirth" case by introducing a new controlling shareholder.

In 2003, Xi'an Qinchuan car, which was on the road of domestic cars, was bought by BYD, the second largest rechargeable battery manufacturer in the world. With the help of Qinchuan's qualification and production line, BYD motor company was born.

Similarly, at the end of 2017, when the continuous losses were caught in the financial crisis, Bao was able to buy 6 billion 500 million of the 51% stake and become the largest shareholder. Some analysts pointed out that at that time, Chery was undoubtedly the best choice for the introduction of new investors.

In September 28th, Tianjin FAW Xiali automobile Limited by Share Ltd announced joint venture with Nanjing New Energy Automotive Co., Ltd. to set up a joint venture to develop and produce new energy vehicles. At the same time, it also includes R & D, manufacture and sales of passenger cars, auto parts, engines, electric drive systems, battery pack systems and energy storage systems.

However, it is worth noting that after the transaction, FAW Xiali invested 505 million yuan in the assets and liabilities of vehicle related land, plant, equipment and other assets, holding a 19.9% stake in the joint venture company, and assisting the joint venture to apply for the qualification of vehicle production. Then, FAW Xiali will no longer be equipped with the qualification of vehicle production, and will not be able to continue to engage in vehicle production business, which has become another form of "exit".

"In general, even if it falls, it will not end in bankruptcy, but merger or acquisition or reorganization." An insider familiar with the enterprise bankruptcy law told reporters.

It is understood that under the current system of enterprise bankruptcy, there are usually three types of reorganization, reconciliation and liquidation. Reorganization means that enterprises can return to normal through certain ways and procedures, such as selling assets, stripping bad debts, reorganizing and introducing investors. Reconciliation is to reduce the current debt pressure by creditors and enterprises through debt relief, debt restructuring and debt to equity swap, so as to restore normal operation of enterprises.

Only when an enterprise legal person can not repay debts due to maturity, and the assets are not sufficient to repay all debts or obviously lack the solvency, will the debt be cleaned up according to the provisions and enter into bankruptcy proceedings.

"At the stage of bankruptcy reorganization and reconciliation, enterprises are likely to return to normal operation, but all parties may have to pay some price, including the sale of high-quality assets and stripping of non-performing assets." The above said, "the original intention of the bankruptcy law is to save enterprises through various means. Therefore, most bankruptcy cases will go through the process of reorganization or reconciliation first, in short, to achieve the goal of ending debts and making bankrupt enterprises continue to develop.

Who will perform social responsibility?

In fact, as a product with a long life cycle, not only automobile consumers are highly dependent on the professional service system of automobile manufacturers, but also automobile manufacturers should shoulder the responsibilities of safety, fuel consumption and emission.

For the automobile consumers, in the face of the reorganization of the automobile manufacturing enterprises, the forty-first article of the consumer protection law also clearly states that consumers' legitimate rights and interests are damaged when they buy, use the goods or receive services, and because the original enterprises are separated and merged, they can claim compensation from the enterprises that bear their rights and obligations after the change.

The product quality law also stipulates clearly that sellers must be responsible for the quality of products purchased by consumers. The three package stipulates that the warranty period for vehicle manufacturing enterprises is not less than 3 years, 60 thousand kilometers, and the three package is not less than 2 years, or 50 thousand kilometers mileage.

In addition, in order to ensure that the legitimate rights and interests of automobile consumers are not infringed, according to the "vehicle sales management implementation measures" which was formally implemented in July 1, 2017, when the dealers of household automobile products no longer operate the supplier's products, they should notify consumers promptly and change the dealers who bear the "three package" responsibility with the cooperation of suppliers. The supplier and the dealer who undertake the "three package" responsibility shall ensure that the corresponding after-sales service shall be provided for the consumers. At the same time, suppliers must ensure the following 10 years of spare parts supply and after sales service.

Take SUZUKI's withdrawal from the Chinese market as an example. Changan automobile bought the Japanese shares of Changan SUZUKI with one yuan price and fully supported Changan SUZUKI's continuous operation. SUZUKI will continue to provide production license to Changan SUZUKI, Changan SUZUKI continues to produce and sell the brand name automobile and offer after-sales service.

This also means that in the future, the production, operation and after-sale services of Changan SUZUKI will be fully supplied by Changan automobile, no matter whether it is the repair and maintenance of the old car owners, or the new users who want to buy a car, they will not be affected.

At the same time, in the view of Zhong Shi, an automobile analyst, there are enough car after-sales service to be a good business, and businesses will rush to do it.

"After Rover's bankruptcy in the UK, millions of vehicles with after-sales service from other companies will be able to make money through other companies." The experts added that "at present, there are relevant laws and regulations in developed countries. As more and more enterprises have problems or even quit, the problem of how to fulfill the social responsibility of vehicle ownership by vehicle companies will become more and more prominent.

In fact, in the face of problems such as air pollution and road traffic safety caused by the use of cars, vehicle manufacturing enterprises have an unshirkable legal and social responsibility.

In January 3, 2017, in the implementation plan of the producer responsibility extension system issued by the general office of the State Council, it was the first to determine the implementation of the extended producer responsibility system for 4 categories of products, such as electrical appliances, automobiles, lead-acid batteries and packaging products.

According to the plan, it is clear that the product design of automobile production enterprises should consider recyclability and dismantling; the technical information and diagnostic equipment used for maintenance and repair will be opened to independent maintainer (including remanufacturing enterprises). At the same time, we should explore and integrate the basic information of automobile production, transaction, maintenance, insurance and scrap, and gradually establish a unified national vehicle lifecycle information management system, and strengthen the management of the recycling and utilization of scrapped automobiles.

Can reorganization solve problems?

However, for the last sale enterprises with poor sales volume, there is no product resources or technical resources. In the case of the whole car market going down, slowing down and increasing competition, whether the marginalized car companies can really solve the problem still need to issue a big question mark.

In August of this year, the restructured Beiqi silver Xiang was reported to be "disbanded" and "restructured for 1-3 years".

Subsequently, Beiqi silver Xiang issued a statement saying that the restructuring work is being carried out and that the difficulties it will face will be properly solved after the reorganization is completed.

Although the news is groundless, reorganizing "obstruction and long" is also an objective reality. In the past year, the company has already welcomed the three rights protection of dealers.

According to the information provided by the dealer, the dispute between the two sides is that the 200 million of the debts owed by the Beiqi silver Xiang and the refusal to provide spare parts after the shutdown of Beiqi silver Xiang affected the after-sale problem of the vehicle.

"Some speed cars are still in the three year and one hundred thousand km free warranty period, but because the manufacturers do not provide accessories, the owners run to the 4S shop to block the door." There are dealers in the right to protect.

It is understood that, starting in 2018, Beiqi silver Xiang suffered a lot of problems such as stop production, lay off workers and safeguard rights. In recent years, sales of cliff cliffs have collapsed and are often in a state of discontinued production. In addition to the dealer's retreat, the development, sale and after-sale system of Beiqi Yin Xiang has been seriously damaged.

Dealers hope that Beiqi group, the largest single shareholder of Beiqi silver Xiang, will take responsibility.

It is reported that the BAIC group has made a commitment to the dealer, and after the reorganization, it will return the debts owed to vehicles, rebates and so on.

"Beiqi group's" hand help "is also helpless. Some people in the industry have said that Beiqi Yin Xiang, after all, has hung the brand of Beiqi, and Beiqi does not want it to sink too deep, so it has joined forces with the Chongqing municipal government.

In fact, Chongqing Hechuan district government and Beiqi group had been actively engaged in blood transfusion for Beiqi Yin Xiang. In October last year, Beiqi group, Chongqing Hechuan government and Chongqing silver Xiang Industrial Group Three invested about 2 billion yuan in Beiqi silver Xiang, hoping to help Beiqi silver Xiang resume production.

However, from a notice of discontinuation of production in July last year, Beiqi Yin Xiang still failed to get out of the difficulty. In the environment of car market continued downhill, the reorganization of Beiqi silver Xiang also adds a lot of uncertainty. No matter whether the legitimate rights and interests of consumers are paid by anyone, there is still no solution.

"The brand manufacturers are gone, the authorized sales and service systems are gone, the parts supply chain is broken, the relevant legal responsibilities, the after-sales service responsibilities of the vehicles, and the original service commitments of the manufacturers are responsible. How do consumers protect their rights? How should enterprises undertake relevant laws and social responsibilities? Many industry experts call for these problems to attract the attention and attention of the industry.

(Editor: He Fang)