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Income and net profits for listed automotive dealership networks in China over the first half of 2015

Suffering from a lagging economy, burgeoning inventories and struggling stock market, the Chinese automotive dealership industry has seen both demand and sales fall. Despite the fact that automotive manufacturers have used several measures to counteract these trends, including cutting prices, limiting production and offering subsidies for automotive dealerships. However, these measures have not been enough to solve the problems dealership networks are facing. Most dealership networks in the country have reported falling net profits for the first half of this year.

While China still possesses a plentitude of dealership networks, the six largest ones are still Shenhua, Yonda, Pangda, ZhengTong, Zhongsheng and Yaxia. The former three are listed on the Shanghai and Shenzhen Stock Exchanges, while the latter three are traded in Hong Kong.

According to statistics from Gasgoo.com (Chinese), the combined business returns and net profits of all publically-listed dealership networks in the country both decreased in the first half of 2015. All networks’ business returns and net profits for the six month period totaled 89.94 billion RMB ($14.09b) and 1.09 billion RMB ($170.23m), down 4.2% and 21% from a year ago. The combined net profit rate for Chinese dealership networks is only 1.2%.

Although Pangda, China’s largest dealership network, added a number of outlets specializing in the sales of new energy vehicles and managed to post some good sales numbers to boot, it has still not been able to reverse negative market trends. Pangda’s total returns for the first half of the year was 2.69 billion RMB ($4.22b), down 13.3% from the 3.10 billion RMB ($4.86b) worth of returns posted in the first half of 2014. Its total net profit for the first half of this year was 41 million RMB ($6.43m), a 5.4% decrease from a year ago.

Most of Yaxia’s divisions, aside from its financial and driver training services, have all posted income decreases. At the same time, Yaxia has been working to increase inventory management and improve its sales performance. While its net profits for the first half of 2015 were better than those for the whole of 2014, they were still 87.9% less than net profits for the first half of last year.

ZhengTong’s returns and net profits also decreased, following 11.1% and 30.5% to 13.87 billion RMB ($2.17b) and 347 million RMB ($54.39m), respectively. Meanwhile, Zhongsheng posted slight positive growth among returns of 0.4%. However, Zhongsheng’s net profits fell 46.5% from 580 million RMB ($90.92m) in the first half of 2014 to 310 million RMB ($48.59m) in the first half of 2015.

Shenhua’s returns grew 4.1%, totaling 2.99 billion RMB ($468.69m). Shenhua actually managed to post a net profit of 550 million RMB ($86.21m) this year, compared to the net deficit it suffered a year ago. Part of this success has been due to new incoming funds from new shareholders.

Yonda has also managed to post increases among its business returns and net profits. Yonda’s returns grew 12%, totaling 16.81 billion RMB ($2.63b), while its net profits increased 6.3%, totaling 330 million RMB ($51.73m). Yonda has benefited from its new business model of focusing on Internet-based e-commerce business models.

Gasgoo