Specialist
Former Director at China Zhengtong Auto Services Holdings Ltd
Agenda
- Auto sales in China, highlighting Zhengtong Auto (HKG: 1723) – trends and forecast amid the novel coronavirus outbreak
- Audi’s (ETR: NSU) dealership system in China and customers’ preference for Audi
- Dealerships’ pricing system and recent changing trends, plus auto manufacturers’ supportive policies for dealers
- Competitiveness of major auto dealers and projected auto sales development trends
Questions
1.
What do you think are the specific impacts from the novel coronavirus outbreak on auto sales, auto dealers’ inventory, financial pressure and profitability? How long do you think it will take for auto dealers to overcome the impacts?
2.
Is the inventory ratio of 1-1.2 you have just mentioned at a normal level compared with that of previous years?
3.
From what I heard, auto dealers’ inventory ratio was around 1.5, which is different from the statistics you have shared. What do you think is the reason for the different statistics worked out?
4.
How much would auto dealers’ inventory increase by respectively if the coronavirus could be contained in Q1 and Q2? Could you predict on their inventory ratio at the time?
5.
You have just mentioned the major issues faced with auto dealers. I learned some time ago that the China Association of Automobile Manufacturers (CAAM) did not lower the industry’s growth expectation. After the impact from the coronavirus outbreak on supply chain and sales starts to appear, auto manufacturers will probably lower their 2020 targets. Under such circumstances, what do you think are the potential risks for auto dealers?
6.
Zhengtong Auto’s auto dealer subsidiary pays rent to its real estate subsidiary. In this case, does it bear lower rental cost compared with other dealers in the industry?
7.
Did you just mention that Audi offers allowances to about 20 salespersons for one 4S store?
8.
People expect an auto sales rebound when the epidemic is over. What is your opinion on that? How would you predict the auto sales in 2020?
9.
Which models and brands will consumers with rigid demand choose when they first purchase vehicles?
10.
You mentioned that the sales of luxury vehicles were relatively high in 2019. Will the gap between the sales of luxury, mid-to-high-end and low-end vehicles continue to widen in 2020? Which auto brands and models are you optimistic about?
11.
Many auto dealers adopt new marketing models to cope with the coronavirus outbreak. They set up online virtual reality exhibition halls, shoot short videos and conduct live-streaming for marketing. How will these publicity means boost the sales of vehicles after the coronavirus?
12.
If traditional auto enterprises imitate the marketing model of internet-based enterprises, will there be a great impact on auto dealers? Is there a possibility that auto enterprises will terminate the cooperation with dealers?
13.
Zhengtong Auto ranked ninth in 2013 among auto dealers and falls out of the top 10 at present. What kind of pressure is facing Zhengtong Auto? What’s the competitiveness of auto dealers?
14.
You mentioned that Zhengtong Auto is involved in too many other industries. In fact, other auto dealers are in the same situation. Do you think auto dealers can withdraw from other industries to reduce the burden on overall business?
15.
Some new brands such as Didi Xiuche (滴滴修车) and Tuhu have entered the automobile after-sales service market. How much is the market share of auto dealers? Will they gradually lose the market share to the new brands?
16.
As you mentioned, Zhengtong Auto is facing some capital problems. Is the capital difficulty common among auto dealers? Is there any auto dealer without such a problem? How do you think of the general financing environment for auto dealers this year?
17.
How is the operational efficiency of Zhengtong Auto’s shops in comparison with that in the past?
