Is the luxury brand still the "golden oil" for dealers?

Recently, Zhongsheng Holdings announced its 2019 results. The content shows that the 2019 revenue 124.043 billion yuan, an increase of 15.1% year-on-year; of which, the new car sales revenue was 106.199 billion yuan, an increase of 13.9% year-on-year; profit attributable to shareholders was 4.502 billion yuan, an increase of 23.8% year-on-year.

What's worth noting is that the growth in earnings was mainly driven by sales of luxury branded vehicles. According to the data, Zhongsheng Holdings sold 228,000 luxury-branded vehicles in 2019, up 18.42% year-on-year, accounting for 50.04% of the group's total sales. The company's cumulative sales of new vehicles totaled 455,700 units in 2019, up 10.6 percent year-on-year.

This confirms that in 2019, despite the overall downturn in the auto market, sales of luxury brand cars in the country are bucking the trend. In 2019, domestic new car sales of luxury brands realized 2.205 million units, up 11.9 percent year-on-year, according to data from the Passenger Federation.

Including always adhere to the market positioning of luxury car dealer group Yongda Auto is also the same, last year through a series of acquisitions, Yongda brand layout to expand again, the formation of Shanghai region Porsche, BMW, Mercedes-Benz, Audi, Lexus, the five major luxury brands of the full coverage. the first three quarters of 2019 consolidated revenue of 44.693 billion yuan, a year-on-year increase of 10.9%; the company has a Net profit attributable to owners of RMB1.074 billion, up 14.6% year-on-year. Passenger car sales during the period amounted to 139,900 units, up 9.8% year-on-year.

While the dealer group representing relatively few luxury brands, Guanghui Auto was not so "lucky" in last year's auto market winter. 2019 three-quarterly report showed that Guanghui Auto's revenue in the first three quarters of 2019 achieved a slight year-on-year increase of 1.47%, but net profit attributable to shareholders of the listed company declined by 28.76%, and net profit attributable to shareholders of the listed company declined by 28.76%. 28.76%, and net profit attributable to shareholders of listed companies net of non-recurring gains and losses slumped 28.04%.

While with the luxury brand of Zhongsheng and Yongda have good performance, but the 2020 new crown epidemic this "gray rhino" but to all the dealers "hit" the "fainting! ". The host factory stopped production, dealers closed store. So much so that the dealers increased for the live, cloud car show, VR look at the car and other online marketing investment, so as to save the losses brought during the epidemic.

But the automakers' production plans are not going so well, and even the luxury brands are no longer the "silver bullet" for dealers. Affected by the epidemic, BMW Brilliance Shenyang plant original January and February quota orders postponed to March and April production, part of the original March and April quota orders, need to be canceled from the system production plan. Among them, the domestic 1-series trim level, domestic 3-series long-wheeled version, domestic 5-series long-wheeled version, domestic X3 and other models are affected.

Toyota Motor Kyushu's Miyata plant production line was shut down due to the re-emergence of employees infected with the new coronavirus. The plant, which has two production lines, mainly produces models under the luxury brand Lexus, including the CT, ES, NX, UX, RX and other series, with more than 90 percent of the plant's output supplied to overseas markets, mainly exported to China.

As Toyota relies on imports for all of its Lexus-branded vehicles sold in China, the future pickup dates for Chinese Lexus consumers will be affected. Hot-selling models such as the ES generally have a contractual pickup time of about three months, and the plant shutdown will certainly affect the delivery time.

Data from the China Association of Automobile Manufacturers (CAAM) showed that in February, China's automobile production and sales amounted to 285,000 and 310,000 respectively, down 79.8% and 79.1% year-on-year. As of 16:00 on March 19, the nation's dealers had a comprehensive resumption efficiency of 60.79 percent, a store resumption rate of 92.8 percent, a sales efficiency of 45.3 percent and an after-sales efficiency of 55.7 percent.

Well, the good thing is that the domestic epidemic has been effectively controlled, and the CCA expects that suppressed consumer demand will be released in the short term after the epidemic ends, and the auto market will usher in a wave of short-lived consumer peaks. Data released by the CCA shows that the overall trend of the domestic passenger car market recovered significantly in the second week of March (9th-15th), with an average daily retail sales of about 21,700 units, up 30.18% compared with the first week of March (1st-8th).

From the data, auto consumption is gradually strengthening. Meanwhile, cities such as Guangzhou, Changsha, Xiangtan, Zhuhai, Foshan and Shenzhen have introduced favorable policies to stimulate auto consumption. But according to a recent survey by the National Federation of Industry and Commerce Automobile Dealers Chamber of Commerce, during the epidemic, automobile dealerships were affected by a sharp decrease in pre-sale traffic and after-sale store visits, and an increase in purchasing costs, which led to high pressure on lending and difficulties in capital turnover, and a rise in operating costs.

So after the epidemic eased, dealers couldn't wait to launch a sizeable promotional campaign. Attempts to attract new and old customers to the store through discounts on car purchases, public service announcements, and cooperation with other industries, to fully promote the recovery of auto sales. A survey shows that luxury brand dealers, including Mercedes-Benz, Audi, BMW, Lexus, etc., have made considerable concessions in the terminal price of new cars.

While the development of the automobile market remains bleak throughout the year due to the decline in income of some residents, especially in the middle and lower income groups, the situation is still not optimistic. But in the long run, China's auto consumption there is still a lot of potential, and after the epidemic, will inevitably usher in a brief consumer release. Especially in the field of luxury brands, it will still continue the consumption trend of 2019.

Although in order to ease the impact of the epidemic on the auto market, the Ministry of Commerce has introduced policy measures to further stabilize auto consumption, and actively promote the optimization of auto purchase restrictions to stabilize and expand auto consumption. But from the broader market, if the detailed policy is not introduced to the ground, from the side will also inhibit part of the consumer population on the sidelines.

Wen/Yang Jing

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This article comes from the authors of AutoCommons, and does not represent the views of AutoCommons.