Car dealers are still under pressure in price cuts in February

In April, Shanghai Volkswagen led a price war for official car prices, but for dealers, officials have been falling for nearly two months. The situation they face is still not optimistic - as mentioned earlier, In May, the 57.3% distributor inventory warning index was still above the warning level. According to forecasts, the overall market demand in June may continue to contract, and inventory pressure still exists.

On the one hand, the crisis of distributor inventory has not diminished. On the other hand, the sales of new vehicles have fallen compared with the same period of last year. After the officials dropped for two months, the market did not appear to be expected to pick up. It is still unknown whether this measure can ultimately save the market and help dealers get out of the difficulties.

Purpose to ease the relationship

The data shows that more than half of automakers in 2014 did not complete the expected sales task, and even a far cry from the ambitious sales target, and the sales pressure of auto makers eventually fell to the dealers, which also caused contradictions between dealers and auto companies. Frequently, car companies began to consider reconstructing relationships with dealers.

The ultimate goal of the official decline is nothing more than to promote sales and increase sales. Although this round of large-scale official landings is actually a helpless move for companies in the market downturn environment, the industry still believes this is a good news - that manufacturers began to consider dealers to make profits in order to reduce the pressure on dealers . Yan Jinghui, deputy general manager of the Beijing Yancheng Asian Games Village automobile trading market, said in an interview with the media that the official decline can help dealers to digest the backlog of inventory for sale to ease financial pressures, but the specific effects remain to be further observed.

In fact, for the distributors with poor overall operating conditions, price reduction sales and sales at the expense of profits have long been common practice in the industry. The official decline is to convert the principal of interest from dealers to OEMs and restructure the product price system. As a result, dealers can reduce the price of cars, and they can also enjoy official promotions. Analysts believe that this may allow dealers to reduce their operating costs and losses. Judging from the relationship between car manufacturers and dealers, Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said that if the auto market is changing from the seller’s market to the buyer’s market, if the manufacturers do not give full respect to the dealers, they will fall into fear. Great crisis.

The effect is still "not enough"

According to a sales person from Buick, the official drop is like an advertisement. Indeed, consumers have come to see the car after hearing the official decline, but the actual transaction volume has not changed much compared with before. Judging from the sales of Shanghai Volkswagen, the first to implement price cuts, in March and April, Shanghai Volkswagen sold 157,007 units in March, compared with 140,091 units in April, a month-on-month decline. Some analysts believe that this has something to do with the popularity of Shanghai Volkswagen’s officials, which does not cover Passat, Tiguan, and LaVida. Among the 40 models that Shanghai General Motors announced, the sales of Regal, LaCrosse, Excelle, Cruze and other models with higher sales price were only 10,000 yuan, and the best-selling models such as Hideo did not cut prices.

The limitation of the scope of the official drop of the model allows some consumers to find the target model after entering the store and there is not much preferential treatment, so the enthusiasm for the transaction is not high. In addition, some 4S stores will not use the official drop and store discount offer when selling new cars, but which one has a larger discount rate. Consumers do not buy it, dealers naturally can not quickly boost sales, and sales staff of multiple brands have expressed that the original discount rate of the dealer is already very large, and the strength of the official drop did not exceed the previous price concessions, So the effect on sales growth is limited.

The market reaction did not reach expectations and dealers had limited profit. This was confirmed by Yan Jinghui. He said that from the Asian market situation, sales in April and May did have some rebounds, but sales still fell significantly compared to the same period last year. Another dealer has also admitted to the media that the official drop in sales to dealers has increased the profitability of bicycle sales. However, the increase in sales target at the beginning of the year has not weakened the pressure on dealers. The car companies are making profits for sales, and the ultimate pressure is on the dealers. The problem of price inversion and high inventory still remains unsolved. In order to solve these problems, it is not enough to rely on the current downfall.

Breaking the conflict is really somewhere else

Statistics show that only 30% of distributors made profits in 2014, while 40% of dealers had basic balance of payments, and 30% of dealers had lost money. From the data point of view, the pressure faced by dealers last year was already considerable. The main reason for the loss of distributors is high inventory. Although this year's behavior of manufacturers' pressure has been reduced, this inertia still exists. The problem of pressure storage and price upside-down is still the focus of conflict between the two sides. From this point of view, official decline has not fundamentally eased the plight of dealers.

When market demand slows down, if manufacturers still transfer large quantities of inventory to circulation, it will cause dealers to fall into a serious loss situation because they carry a lot of inventory and the business environment deteriorates, financial costs increase, and the capital chain breaks down. Obviously, the dealer's high inventory phenomenon did not have an immediate effect within two months after the official drop. This can be seen from the May dealership inventory warning index released by the China Automobile Dealers Association.

To this end, some dealers said that these measures of car companies in the market terminal role is far from enough, manufacturers can not fundamentally lift the pressure on the survival of dealers, if the scope of the official fall can be further expanded to help 4S shop to bear some of the discounted fees, May be more substantial. Pang Qinghua, chairman of the Datong Automobile and Trade Group Co., Ltd., believes that although the officials stated that the manufacturers have started to consider giving profits to distributors at the sales end, manufacturers must no longer force the dealers to force them to resolve the difficulties faced by dealers. It is no longer permissible to allow the price to hang upside down. The current sales policies should also be revised. In addition, manufacturers should also exercise discretionary power to allow distributors to operate independently.

The collective junta of the mainstream joint-venture brand is still less than two months old, and the effect will take a long time to test, but the official landing is obviously not the only means to solve the dealer's dilemma. In the general environment of the overall slowdown of the auto market, experts also recommend that dealers should “stop loss” as soon as possible to strengthen asset lightweighting, strengthen financial management, and pay attention to the depth of inventories; at the same time, they should further expand related businesses and multi-innovation to balance revenues and expenditures. .

To solve the dilemma faced by dealers, manufacturers can no longer force the dealers to press the car, can no longer allow the phenomenon of price inversion, and the current sales policy should also be modified.