Second Hand Vehicle Industry In Winter: "Good Faith" To Reduce Wages And Save Themselves

The recent adjustment of second-hand car business platform has made the industry extremely nervous.

At the end of the past weekend, the internal letter sent to some employees by the group was exposed and attracted widespread attention. In the internal letter, the company believes that the company will encounter difficulties in its operation, and the staff who receive the letter will be closed down from March 1st.

The above information is interpreted by some media as "excellent". But this is not the case. It is understood that only part of the staff are laid off for work, while other employees are arranged for temporary pay cuts.

The measures were put into operation in February 15th, and the letter said that the time to reduce salaries is expected to last until the end of May, and those who have been laid off to work will be able to return to work as soon as the market has recovered slightly.

Yunxin is "the first stock of China's second hand car business". It landed on the New York stock exchange in June 2018 and was once a hot unicorn in the industry. But in recent years, its performance and capital market performance were not very satisfactory due to the overall automobile consumption and other factors.

In the past year, it has started painful adjustments, stripped off its financial services and new car business, and has all its energy betting on second-hand cars. During the period of business transformation, the flow of personnel was frequent, and the outbreak of pneumonia outbreak caused by the new coronavirus made the electronic business platform have to accelerate the adjustment.

Of course, it is not the only company that has "moved" in terms of human resources. Earlier, in the first 2 months of the month, a lot of search engines and cars were used to cut jobs. In March 2nd, Yao Junhong, the founder of the search vehicle, told the twenty-first Century economic report that the affected businesses have weakened some individual businesses which can not see the cash flow in the short term.

The whole industry has been hit hard by the epidemic. In March 2nd, Luo Lei, Deputy Secretary General of the China Automobile Circulation Association, told reporters in twenty-first Century economic report that the second-hand car business platform is a relatively large organization in the industry. There are tens of thousands of employees in the head office, even if they operate normally, the cost is also very high. Especially, during the epidemic period, there is almost no income, and the business pressure of enterprises will naturally be greater.

Luo Lei believes that for the electronic business platform that is still in a state of loss, adjustment and transformation is necessary, including adjustment of business structure, business mode, personnel structure and so on.

Good faith disguised in layoffs?

In February 15th, excellent letter began to deploy two schemes of "flexible employment" and "short-term wage reduction" internally. Among them, "flexible employment" is the "stop work waiting for duty" since March 1st.

You believe that during the shutdown period, the minimum living security will be paid for employees in accordance with local policies, and the basic social security and housing provident fund will be borne to protect their basic life. However, such arrangement still caused dissatisfaction among some employees who had been laid off.

They believe that the best way to get the minimum wage is to lay off workers in disguised form. According to information, employees who have been laid off for work only pay about 1700 yuan a month, which is simply not enough to meet their needs.

Excellent letter said that the stand-by and the short-term pay cuts were all aimed at coping with the new crown epidemic situation, and stressed that the company faced "no layoffs" in the face of the epidemic. Compared with short-term wage cuts, downtime for post employment is indeed more affected. It is reported that according to the position and rank of the staff, you can determine the salary cut, and the ordinary employees will get a pay cut of 20%-30%, and the management salary cut is no less than 40%.

Another reason for the controversy is that employees who have been laid off for work are reflected. The company had asked for advice on the "flexible employment" plan, and has expressed its disagreement, but it has been suspended from work. However, an insider said that the company has organized hundreds of communication sessions with staff at all levels, and has gained the understanding and support of almost all colleagues.

Layoffs, or staff optimization, are not the only ones in the current situation. After the Spring Festival, the earliest news of the layoffs was the big search car. It was alleged that the 70% offline team was removed, and the second-hand cars of melon seeds were also called "disguised layoffs" because of the implementation of phased salary cuts.

Yao Junhong responded to the twenty-first Century economic report reporter, saying that some adjustments were made to the epidemic, and some of the future businesses or the cash flow business in the short term had been weakened. However, some of the core businesses and cash flow receipts are still being strengthened. On the whole, employees were reduced by a fraction of 13% and 14%.

"We will extend the year-end bonus to employees in 2019, and in accordance with relevant policies and industry standards, compensation for employees' N+1 'will be carried out to protect the rights and interests of the employees who have been laid off. Yao Junhong said.

Suspension of second-hand car transactions

Behind the adjustment of second-hand car dealers, the whole second-hand vehicle market is postponed under the epidemic.

"There is no business at all." Previously, the former used car dealer told the economic report in twenty-first Century that he had planned to reopen in early March, but was expected to send staff on duty only after being lowered. Compared with the traditional used car dealers, the second-hand car business platform has a large scale and high cost, and faces greater challenges in the face of lower cash flow. Even almost all second-hand car dealers have yet to make profits.

Take excellent credit as an example, its previously announced financial report shows that only in the third quarter of last year, the company made a loss of 267 million 200 thousand yuan. In the cost item, the revenue cost is 206 million 600 thousand yuan, and the total operating cost is 509 million 900 thousand yuan (including sales and marketing cost 330 million 300 thousand yuan).

The competition in the used car industry tends to be white hot. In order to highlight the tight encirclement, the second hand car dealers such as Niu Xin spent a lot of money on marketing, which led to their high sales and marketing costs. Data show that in the 2016-2018 years, the marketing cost of excellent letter was 793 million yuan, 2 billion 201 million yuan and 2 billion 680 million yuan respectively, accounting for 96.24%, 112.80% and 81.04% of the total operating income respectively.

It needs to be pointed out that such a pattern has shown its drawbacks before the outbreak of the epidemic. Although it has been listed on the US stock market, it still faces a long-term shortage of money, while the unsatisfactory performance in the two tier market is making it even worse.

Last year, it sold new car, financial and accident car auctions. In this regard, the founder of excellent letter Dai Kun has pointed out in an interview with the media that it is to concentrate limited resources in the most important direction, that is, second-hand cars "nationwide purchase".

However, the industry generally believes that stripping other businesses is more important in order to return the funds. Public information shows that when it listed, it issued $175 million convertible bonds, but in the past year, it has been underperforming, and it is hard to meet the investor's requirements, which has become the debt that Dai Kun has to repay.

The size of the excellent business that had been stripped of various businesses has shrunk at once. The results showed that the first quarter of last year, the company's revenue was 1 billion yuan, but in the second quarter and the third quarter, revenue was only 439 million yuan, 461 million yuan, shrunk by more than half.

In the industry's view, after the use of second hand car business, the ability to resist risks has weakened, especially the current macro environment which is not conducive to the development of second-hand car market. Under the epidemic situation, there are few consumers on the demand side to buy cars, and the supply side business has basically stagnated.

Yao Junhong also pointed out that the impact of the epidemic, second-hand car is expected to decline as a whole, because a second tier cities will eliminate second-hand cars will be reduced, the year is short, good condition of the vehicle may become very scarce.

In terms of business adjustment, Yao Junhong emphasized that the search engine as an Internet platform for the automotive industry is the largest SaaS service provider in the domestic automobile industry. It provides digital solutions for manufacturers and distributors. Besides the second-hand car, there is also a new business like playing the car.

Industry enters deep water area

From the previous used car B2B auction business to the late attempts to B2C for a broader space market, excellent letters have been trying in the field of second-hand car business in recent years, and the concept of "nationwide purchase" was first proposed and practiced by excellent letters.

The second-hand car "national purchase" means that buyers can choose and buy second-hand cars in any city in their own cities, and provide the buyers with the most suitable products through the information and channel advantages of the Internet.

Since its "national purchase", the related businesses have increased significantly. In the third quarter of last year, the total volume of business transactions nationwide (2C) was 2 billion 828 million yuan, compared with the total turnover of 2B business of 1 billion 537 million yuan, a sharp decrease of 64.1% compared to the same period last year.

However, the whole country is not optimistic about buying in the industry. At the end of last year, people in the industry wrote in the media that, like the direct selling mode of "no middleman making the difference", the state is Utopian and does not have a commercial prospect.

This includes not only the risk of reasonable assessment of the quality of the car, but also the logistics cost that has to be borne, and the potential risk of breach of contract by the buyer.

But this is the mood of Dai Kun, which is the most valuable thing he thinks. "Second-hand car business development has entered the deep water area, the industry also has nothing to refer to, all are their own forward." Practitioners are also noncommittal about this model.

Luo Lei, Deputy Secretary General of the Circulation Association, believes that the "national purchase" business, which is currently in operation, can solve the pain problem of the second-hand car industry to a certain extent, and graft the supply and demand of the whole country through the online platform. However, in practice, the platform should be leveraged with the lightest mode, otherwise it will lose money.

"E-commerce platform is to solve the problem of information and efficiency, can not do anything for themselves, to use the existing second-hand car dealer resources." Luo Lei pointed out that the platform light operation can first solve the problem of interoperability and standardization.

It is worth mentioning that, once engaged in second-hand car trading insiders pointed out that the second-hand car export restrictions last year after the abolition of the domestic second-hand car business will face greater impact, especially second-hand car business.

"Before the second-hand car business providers can get support in the capital market, mainly based on China's huge market prospects, but now the ceiling has appeared, the story of second-hand car business is also unable to continue." In his view, the release of second-hand cars means that in the future, domestic automobile consumption will be more and more inclined to new cars, and used cars will mainly be exported to overseas markets. But at present only a few enterprises have qualification for second-hand car export, and many second-hand car electric providers are not.

But Luo Lei pointed out that the export of second-hand cars is the result of the gradual maturity of the domestic automobile industry. It can not be understood that the second-hand car market will focus on foreign countries in the future. Besides, the demand for cars in the domestic market is echelon, and there is still room for growth in second-hand cars.

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