Domestic automobile dealer oligopolies leave Huarong Road

In recent years, several large car dealership groups, such as Guanghui and Zhongsheng, have planned to acquire 4S stores, which has caused Shanghai GM, Dongfeng Nissan and other automobile manufacturers to pay close attention. According to a survey conducted by the reporter, some manufacturers have already put forward a boycott order against large distributor groups.

This is another bad news brought to the car dealers after Beijing and other cities issued restrictions. Manufacturers who want to boycott dealers’ acquisitions are afraid that there will be another Gome and Suning who are clamouring for themselves. Standing in a dealer's position, to survive in the auto market where competition has already become more commonplace, it is necessary to make the business bigger and not hang in a tree.

Therefore, since last year, the large auto dealers group headed by the giants, Guanghui, Zhongsheng, and Zhengtong have been planning to step out of Huarong Road, a “simple car purchase”—a huge acquisition of Saab’s intention to enter the vehicle field and the rapid acquisition of Guanghui. The 4S stores of various brands were used for the final sprint before the listing. Zhongsheng and Zhengtong accelerated their advancement to high-end brands through mergers and acquisitions, Baileys and CNAF South respectively.

When all automakers are desperately building brand channels, they are also diluting the dealer's single store profits. “Manufacturers have pushed dealers to the bottom line of survival.” Some industry insiders commented that if they do not wait, they will die. Dealers are being transformed. It's just that everyone has chosen a different path.

Single-store profit shrinks by 5 million In a good year, the profit of a typical mid-level brand store is about 5-8 million yuan. The initial investment was 15 million yuan, two to three years back to this. After removing 5 million, many dealers will make ends meet. Selling stores has become the choice of many dealers.

Stimulated by market expectations, Volkswagen, Toyota and other brands have formulated active production and network expansion plans for China. By 2013-2014, auto production capacity will double and the network will double. Capacity growth will inevitably bring about relative saturation of the market. The data shows that in the first half of this year, gross domestic product sales of new cars dropped by at least 2%.

This decline is fatal. Taking a mid-tier brand as an example, the mid-level brand's annual new car sales will be about 1.5 billion yuan and 150,000 units, a total of 1,000 units, and a decrease of 2 points will result in a loss of 3 million. The decline also comes from the expansion of the network to further dilute profits. For example, there are 4 stores in a city and 6 stores are planned according to the plan. These 6 stores will share the benefits of 10% market growth. In other words, the network expansion will reduce the number of units, and the relative surplus of production capacity will reduce the gross profit.

The decline of another three million yuan in profits, coupled with rising land costs, loan interest rates, the use of inventory funds, and employee wages, will squeeze dealers’ profits by 5 million yuan. This is the dilemma faced by a typical mid-level brand merchant. In a good year, the profit of a typical mid-level brand shop is about 5-8 million yuan. The initial investment was 15 million yuan, two to three years back to this. After removing 5 million, many dealers will make ends meet. Selling stores has become the choice of many dealers.

The actions of the big dealer group's closing shop occurred under such a background. Take the example of last year’s Zhongsheng’s merger and acquisition of Baideli, the former acquired 10% of the latter’s 50% shares with a 10x market profit, ie, 1billion, thus establishing the industry price index and benchmark: M&A of luxury brands can be around 10x. The mid-level brand is eight times larger, and it is priced by referring to the pyramid ratio.

Different from the horizontal business integration with Zhongsheng. From "Subaru's Total Generation Model" to intending to invest in Saab into the entire vehicle, from mini-vehicles to large-scale commercial vehicles, from large-scale entry into the three or four-tier market to the automotive industry park. The diversification of a large vertical business once brought great interest to the industry. In particular, a large share of Saab, some people commented that this is "the dealer from the shackles of the manufacturer's classic."

"From the perspective of market law, a fully competitive market is the fundamental driving force for industry progress, and it depends on the brand's regional protection for a certain dealer." Chen Sheng, COSCO, Zhongsheng Group, bluntly stated that Zhongsheng will still be the main seller of the car. The industry extends.

However, the huge and Zhongsheng face the same problem: currently overly dependent on new car sales profits, accounting for 60% -70% of the total profits, in the United States this ratio is 10%.

“The 10% ratio is not in line with the environment in the Chinese market. China does not have strong U.S. social resources, no ready-made insurance models, benefit-sharing, and sharing of responsibilities. It is impossible for dealer groups to build these entire industrial chains in China, so new The development of the business is not so fast.” Some industry insiders believe that the sales of new cars will drop to 40% in gross profit contribution and 40% after sales will be a reasonable proportion. The huge, Guanghui, and Zhongsheng are still far from this proportion. gap.

The sales of the Pao Brother Culture "A single 4S shop is operating well. The manager is almost always starting a business with the boss. The professional manager who was recruited later proved to be unsuitable. Just like Liangshan 100, each person will Give him a hill can be managed." Fu Qiang lamented that many dealers are not Song Jiang.

At present, there are about three types of business in China's auto dealer industry grouping: the first is a regional strong distributor group, which is characterized by dedication to each region, and the second is a single-brand dealer group, such as Lixingxing. Its characteristic is to form a good market reputation and influence through benchmarking and understanding of a single brand. The third is the multi-brand cross-regional distributor group, such as Zhongsheng, Guanghui, Zhengtong, and Huge. However, the truly successful cross-regional multi-brand dealership group is rare because the management scope and regional management span problems lead to lower efficiency.

How are the huge, Zhongsheng, and Guanghui integrated? How do you make money from companies that don’t make money in others’ hands? “This involves the issue of the format and the revenue structure. Integration will expand the group, through the integration of business platforms, such as marketing resource sharing, etc. There is also the introduction of a management model to reduce cost optimization efficiency.” Can be integrated, or mergers and acquisitions will even drag the company.

Zhongsheng’s acquisition of 50% of the shares of Better Profit is a win-win situation for both the acquirer and the acquired party based on the improvement of operating performance. Since the company doubled its financials this year, it is estimated that it will be able to complete a profit of 400 million yuan in the whole year. From the perspective of Zhongsheng, we have bought a good asset at a relatively low price and have formed a substantial financial contribution. When it won, it not only received 1 billion in cash, but also had a dividend of 200 million yuan this year because it had the remaining 50% of the shares.

China's auto mergers and acquisitions are still growing, and dealer recruitment is very common during the expansion process. Its characteristics are only financial mergers and acquisitions, the release of budgets, personnel appointments, and no further actions to integrate, which can easily result in the loss of personnel and a decline in profits. as a result of.

In the eyes of Fu Qiang, deputy general manager of Beijing Benz, there is a paternity culture in selling cars, with less strategy and lack of ideas. Thick and thin leaves, no detail. After taking charge of sales at Skoda, he investigated and found that many dealership stores are increasing and their operating capacity is declining. The reason is simple: At present, there are several brands under the big distributor group. Although the dealer management process is almost the same as that of the dealer management process, the positioning and product competitiveness of different brands are very different. standardization.

“A single 4S shop is doing well. The manager is almost always starting a business with the boss. The professional manager who was recruited later proved to be not easy to use. Just like Liang Shan’s one-hundred-eighth-one, everyone will give him a hilltop. "Good." Fu Qiang lamented that many dealers are not Song Jiang. "This is a relative improvement."

“M&A is far more than a financial act, but a fusion of cultures between two companies, and a series of adjustments. Otherwise, mergers and acquisitions will lose its significance.” Chen Xi repeatedly stressed that Zhongsheng’s acquisition of the company’s major It is to look at the asset structure of the company. The financial budget that was awarded to Better Profit this year was 300 million yuan. The actual implementation result is better than the target.

On September 18th, Zhongsheng Group was selected as the top 50 listed companies in Asia by Forbes in the United States in 2011. The selection criteria is that the income or market capital is not less than 3 billion U.S. dollars, and it is profitable for 5 consecutive years. It is based on a comprehensive assessment of the company’s recent financial conditions, stock price changes, and development prospects.

After Zhongsheng acquired Bailey, the largest merger and acquisition case for auto dealers in 2011 was Zhengtong's 55% acquisition of Zhongqi South. In 2011, SAIC Motor’s performance in the south was not satisfactory. From the perspective of its growth space, Land Rover will also have to break the single-largest sales market in the south of SAIC Motor. In addition, the Land Rover’s urban showroom will all be required to be converted into a 4S shop. The process of reconstructing a 4S shop will involve a lot of investment. Whether or not business continuity will be affected will also be of concern to other distributors.