Meili Car Finance Collapse: Where Is The Way Of Used Vehicle Finance?

After nearly 2 months' insisting, Jiangshan (alias) didn't expect that, without any compensation, meri Car Finance (hereinafter referred to as "meri car") unilaterally relieved the labor relationship between the two sides.

In January 3, 2020, as well as Jiangshan, there were also the vast majority of employees. Under the influence of sudden outbreaks, most of them have not yet found jobs. Without wages, social security and year-end awards, employees have only a slim road to safeguarding their rights.

"The company tells us that because the business can not move forward, it will cost a lot of labor costs every month, so I hope employees can think more about the company and start looking at some jobs. If they find a job, they can directly leave the company." Jiangshan told the economic news reporters twenty-first Century that the company had been paralyzed since last November 11th when the police inspected the Merlot car and took away Liu Yannan, the founder of the company.

After the layoffs and the announcement of the dissolution of the Wuhan branch at the end of November, the team of the meri car originally had some 6000 people.

According to people familiar with the matter, after the layoffs, there were fewer than 200 core technical personnel and business leaders in meri.

Although the police issued a statement on January 22nd that the meri car was not within the scope of the investigation of the incident, the meri car business was also legitimate and compliant. However, in the face of a large number of customers, customers could not get timely customer service, the vehicles could not be released, and a large number of suppliers and dealers could not recover the debts. Banks and other capital companies could not recover the loans, and shareholders could not recover their investment, and the accounts could not be solved. Seal, meri car is still in deep crisis.

In March 16th, the rest of the meri car employees also received the mail: the company will terminate the labor contract with all the staff.

This also means that this company, which has about 6000 employees, covers more than 300 cities nationwide, plans to list in the US in November 15, 2019, and is expected to become the first vehicle of the second hand vehicle finance in China. After leaving behind 21 billion 900 million yuan of bank loan recovery, hundreds of thousands of users' credit impact, and subsequent repayment of mortgage settlement, and 120 million yuan unknown whereabouts, employees are raising funds. Towards dissolution.

All along, the second-hand car financial market is not standardized, and the enterprises are mixed up, resulting in many problems such as poor consumption experience. - Gan Jun photo

Routine loan or mode innovation?

Meri car official website shows that the meri car mainly provides vehicle buyers with installment loans of used cars and new cars for a period of 1-3 years, while helping dealers to provide convenient vehicle trading and inventory financing services. At present, it has accumulated nearly $200 million in financing. Investors include Jingdong finance, leading capital, Yixin, duer and new hope group.

The new network bank of new hope group is the main cooperative bank of meri. The new net bank accounts for a large part of the 21 billion 900 million yuan in the loan balance.

In October 31, 2019, meri car submitted a prospectus to the securities and Exchange Commission to plan to land at the New York Stock Exchange. It plans to raise up to $100 million, and the stock code is "ML".

The prospectus shows that the meri car positioning market in China used vehicle installment service focuses on promoting financial institutions to provide phased loan services to car consumers, mainly through the promotion of car loans to earn revenue.

Prospectus data show that in 2018, Merlin total revenue reached 1 billion 656 million 400 thousand yuan, an increase of 91.1% over the same period, net profit of 318 million 500 thousand yuan, and 984 million yuan in the first half of 2019, an increase of 38.7% over the same period last year.

Although the merlee car has repeatedly stressed in the prospectus that the company is through the energy car dealer, through financial services to promote the efficiency of the line operators, and at the same time it can bring extra benefits to the line operators, creating a second-hand car financial direct sales mode, but since its inception, it has never escaped the fate of the complaint "routine loan".

All along, the second-hand car financial market is not standardized, and the enterprises are mixed up, resulting in many problems such as poor consumption experience.

"The total amount of the loan is 30 thousand yuan, but the bank gives 44960 yuan to the car dealer, which is 14960 yuan more than the sum of the contract, plus 2700 yuan of GPS, and the repayment amount for each period is 1420.25 yuan. In addition to these, there is a loan insurance of 4200 yuan. On March 30th, Mr. Zhou, a merlee car user from Wuxi, Jiangsu, told an economic reporter in twenty-first Century that the amount of money was unknown and did not know what the name was.

Because the loan has not yet been completed, the car is also secured in the new network bank, which is working with the meri car.

"After the 17 phase of the car loan, we have stopped paying the money, and most of the people in the WeChat group of our local Merlion victims are basically the same." Mr. Zhou revealed that the number of WeChat in his group has reached the upper limit, including numerous places such as Guangdong, Zhejiang, Shandong, Xinjiang and so on.

On the issue of cost, Gu Chonglun, a former CEO of merlee, pointed out at a media conference that customers' repayment of money is directly returned to the bank, and that the meri car does not pay for the repayment. Similarly, the meri car will not earn interest rate differentials.

The next question is where does the profit and profit come from?

"In fact, the main profit point of Merle business is to charge users' service fees. These are all costs that need to be paid because of early user control, audit of user qualification and bank loan service. Jiangshan told reporters that under this mode, the industry's common practice is "pre charging service fees".

"Therefore, in the car finance business, the only profitable link is to collect the service charge for buying a car."

According to the data disclosed in the merlee car finance prospectus, in the six months ended June 30, 2019, the fee charged by the meri car was about 4.9% to 11.4% of the loan principal.

"Take 100 thousand yuan car as an example, the company's service charge is about 4000-5000. But if the second-hand is 100 thousand yuan, the used car must be a relatively good car. But how much specific is difficult to say clearly, it is difficult to be a fixed number, because it depends on the user's credit situation. Jiang added.

But when the reporter asked Mr. Zhou about the service charges charged by the merly car, Mr. Zhou explicitly told him that no salesman mentioned him to him when he was dealing with the business.

"A second-hand car didn't cost much money, but suddenly it came out more than 10000 yuan more, and the interest rate changed from 0.6% to 0.82%. Enough to buy a new car." Mr. Zhou told reporters that now only want to return more loans, "customer service phone also can not get through, after the alarm, the police said this is a civil dispute, it is recommended to take legal channels to solve, but now the contract is in the hands of the meri car, we also have no strong evidence."

In addition, Mr. Zhou and the United States have the same experience of the meri car users, are also facing the credit impact and subsequent vehicle repayment problem. "It's the new Internet bank that has been making phone harassment all the time, and then sending messages every day to raise interest rates. I really don't know what to do."

Uncovering the pain point of the industry

In recent years, the steadily rising second-hand car market is regarded as a market with a market value of up to trillion, and second-hand car consumption finance is also a popular circuit pursued by capital markets in the past few years.

According to Frost & Sullian report data, in 2019, the total number of second-hand cars in the whole country increased by 14 million 922 thousand and 800, an increase of 7.96% compared with the same period last year. In the past three years, the growth rate of second-hand car transactions was over 10%.

In the 2019-2023 years, the annual compound growth rate of second-hand car volume will reach 18.1%, and the volume of transactions will increase by 22% years. In 2023, the number of car ownership will exceed 300 million, and the second-hand car volume will reach 21 million, and the second-hand car transaction volume will reach 1 trillion and 850 billion.

However, in the face of the "full" future, the second-hand car business of "crazy burning money" in the second-hand car financial business is also seemingly "unlimited scenery", in fact, "walking on thin ice". It has never found a way to make profits, including the use of second-hand cars, such as melon seeds and excellent cars.

Although the collapse of meri car finance is not related to the consumer credit business of second-hand cars, but with the gradual disclosure of information, the pain point of the second-hand car consumer finance industry has been gradually uncovered.

"The company's model is so that all sales team personnel are stationed in the second-hand car market, and the former needs salesmen to develop their own vehicle source for the used car market, and to follow the car dealers to recommend the products and services of meri cars, and follow up with the car dealers to do some dredging." Jiang said.

According to previous media reports, the meri car pre service business is to return to the car business way to quickly spread out business. The so-called car dealer return point is a way of consultation between the management and the car dealer to sacrifice the interests of users. In general, the user's monthly interest rate will be returned to the dealer.

This is probably the fundamental reason why Mr. Zhou began to change his monthly interest rate to 0.82% monthly interest rate at 0.6%. But with the disbanded of merlee car finance, the fact is impossible to verify.

But Shen Rong, vice president of Kai Yuan (Beijing) Automotive Information Technology Co., Ltd., looks at the shortcomings of the second-hand vehicle finance mode itself, which is, of course, related to the overall development of the used car industry in China.

"From the business itself, the used car consumption finance has become a magic weapon for the profit of the used car industry, but so far, whether it is the first car loan of 2B business or the meritex car of 2C business, we seem to have not seen a successful case for reference." In March 27th, Shen Rong said in an interview with the twenty-first Century economic report reporter.

In Shen Rong's view, if we can do the corresponding wind control and regulation, the 2B business of second-hand car finance has some imagination, but it is undeniable that for the second-hand vehicle financial platform, 2C business has huge risks.

"The risk and explosion of merlev finance is very important. So far, there are still many problems to be solved in the development of China's used car industry." Shen Rong told reporters that the most important issue is the transparency of second-hand car information.

Shen Rong believes that the direct expression of information opaque is asymmetric information, that is, the information of operators and consumers, buyers and sellers is not equal. This kind of unfairness also manifests that there is not a complete and systematic record of second-hand vehicle information. There is no mechanism for effective disclosure of the basic properties and basic information of vehicle conditions. Because of the lack of information on vehicle quality and vehicle condition, the pricing of vehicles has great uncertainty.

Moreover, as the average price level of the new car market moves down, the second-hand car will depreciate. In the financial business, it will also generate a risk of pricing. Once the second-hand car price falls too fast, the second-hand vehicle consumption financial platform will bear the risk of consumers' malicious arrears.

"Under such uncertain circumstances, adopting this way of consumption finance will naturally have risks, and the risk is either paid by the operator or paid by the consumers. In today's big background, there are actually many variables, and problems have become a norm.

Shen Rong believes that once the effective supervision of business operations and effective wind control mechanism is missing, that is, the financial problems and the causes of thunder.

"In fact, for 2C's second-hand vehicle financial platform, its operation cost and risk are very high. When promoting financial business, the platform must first give some benefits to distributors and salesmen. But for a platform company, the rest is not a profit, but a risk expectation and a depreciation of the vehicle. In fact, this is a common problem. Shen Rong told reporters.

"In the 2002-2006 years, the domestic banks had been doing some auto consumption financial business for a period of time. Later, because of the existence of a series of bad debts, they were put to a halt because of the huge risks and losses to the banks. The phenomenon of second-hand car consumption credit is similar to the situation of that year, that is to say, the release of risk concentration, so it is difficult for enterprises and financial institutions to bear the risk.

Shen Rong told reporters that once the capital market did not give the expected return, plus the concentration of this risk release, closing is inevitable.

Where is the road?

In March 26th, Yixin group released its 2019 earnings report. In 2019, Yi Xin's second-hand car trading volume accounted for 61% and 39% respectively. Among them, the original "small, scattered, non-standard" second-hand car business has been plagued Yi Xin development scale.

However, in the face of the market value of up to trillion of the plate, the gradual development of second-hand car trading demand and second-hand car consumption credit is difficult to obtain from the banking institutions in the status quo, what is the way of second-hand vehicle consumption financial platform?

In Shen Rong's view, the consumption credit business of second-hand cars is not as simple as imagined, but still needs a gradual process of cultivation.

"This cultivation process is in fact compatible with the integrity system, credit investigation and supervision mechanism of the whole society. The establishment and improvement of the integrity system of the whole society can play a catalytic role. However, for the second-hand car which is not long in China, its role and positive driving role should be limited, and the most important thing is to do well in risk control.

Shen Rong said that in this process, excessive pursuit of short-term interests, pursuit of speed and pursuit of scale may be associated with greater risks.

"Before the presentation of the speed and performance of the merlee car finance business, it ignored or did not pay more attention to risk control, which led to the superposition and centralized release of risks. This led to such unprecedented difficulties for such platforms and institutions. Therefore, effective wind control and regulation are more important than large-scale business expansion for second-hand vehicle finance and these institutional platforms including consumer credit and other related businesses. Shen Rong told reporters.

Therefore, Shen Rong believes that compared to the 2C business which is more difficult to monitor and control risks, 2B's financial credit business may be more imaginative in the future.

"Car dealers are operators, and their business is high frequency. At the same time, they will have a certain understanding of vehicle dealers' related credit, business status and business status, and can effectively supervise and manage the relative closed vehicles, so the risk is controllable."

In addition, Shen Rong believes that the bottleneck of the development of used cars is that the tax issue of second-hand cars has not yet been solved.

It is understood that the second-hand car transaction taxes and fees have not been unified. In the trading market, individuals' taxes on personal transactions are 2%, while the taxes on second-hand car auctions are 4%.

"The disunity of taxation is not an effective boost to operators and market activity. It hopes to take this opportunity to make changes in the tax revenue of second-hand cars at the policy level. The increase in transaction costs, time costs, capital costs and labor costs has also hampered the market's activity. It is hoped that a temporary property rights system can be established to make second-hand cars a commodity and create a more relaxed and healthy development condition for the second-hand car industry. This may be a common expectation at this stage. Shen Rong finally said.

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