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On August 8, according to multiple media reports, a letter from a dealer in Hunan Province to Beijing Hyundai was circulated on the Internet.

The letter stated, “In view of the huge inventory pressure, extremely difficult operation and serious losses of all dealers in Hunan Province, all dealers in Hunan Province unanimously request thatWe will temporarily stop picking up vehicles from your company from August 8, 2024, and will no longer accept vehicles automatically delivered by your company.Otherwise, all consequences will be borne by your company. And your company shall immediately solve the existing inventory of dealers in Hunan region and honor all previous commitments and incentive policies." The bottom of the letter has the seals of 9 car dealers.

Image source: Photo by Li Xing, reporter of China Business Network

Once the news came out, it attracted public attention. A Beijing Hyundai dealer in Hunan told the media that the above letter was true.

On the morning of August 9, a reporter from the "Daily Economic News" contacted relevant personnel from Beijing Hyundai, who did not respond directly to the incident and said that the company is currently understanding the specific circumstances of the incident.

"Lawyers have followed up"

In order to further understand the specific situation, the reporter contacted several Beijing Hyundai dealers in Hunan Province by phone. Many people from the co-branded dealers avoided the reporter and did not answer the call. Among them, the person in charge of a dealer in Yiyang told the reporter that the specific situation can be contacted by the responsible lawyer, and the lawyer is already following up. Another employee of a dealer in Yongzhou told the reporter that the incident was inconvenient to disclose.

The reporter learned from a Beijing Hyundai dealership in Changsha that the dealership is indeed facing sales pressure and has about 100 cars in stock. The salesperson at the store told the reporter that he was not clear about the details of the aforementioned letter. "If we can't sell enough cars to pick up, there will be pressure and inventory, but we can't stop picking up cars," the person said.

Image source: Photo by Zhang Jian, reporter of China Business Network

Public data shows that Beijing Hyundai's sales in the first half of 2024 will be 100,000 vehicles. An automotive industry practitioner told reporters: "This is not the first time that dealers have withdrawn from the network. The automotive industry is very competitive now, and the market conditions are not good. The business model of dealers generally relies on rebates (for sales). This also means that under the pressure of overstocked vehicle models and falling sales prices, after deducting the operating costs of stores, dealers' current profit margins are not optimistic."

Dealer inventories remain high

In the context of the "price war", domestic auto dealers are under great pressure. The latest issue of the "China Auto Dealer Inventory Warning Index Survey" VIA released by the China Automobile Dealers Association on August 5 shows that the China Auto Dealer Inventory Warning Index in July 2024 is 59.4%, up 1.6 percentage points year-on-year. The inventory warning index is higher than the prosperity line (50%), and the automobile distribution industry is in a recession. Under this situation, dealers' operating conditions are not as good as expected, the profit margin of new cars is compressed, and inventory backlogs and weak market demand are the main problems at present.

Yan Jinghui, an expert member of the Expert Committee of the China Automobile Dealers Association, said in an interview with reporters that under the dual pressure of funds and inventory, some dealers may choose to withdraw from the market, which is an inevitable result of market competition. However, during this process, manufacturers should adhere to the principle of "good together and good parting" and properly handle the withdrawal from the network to reduce the damage to dealers.

"For dealers still in the market, manufacturers should pay more attention to maintaining existing channels, and work together with channel dealers to overcome the difficulties," said Yan Jinghui.

In fact, in the face of the impact of electric intelligence, Beijing Hyundai is also actively transforming and promoting the launch of similar pure electric and hybrid models. Earlier, Beijing Hyundai Deputy General Manager Qi Xiaohui told reporters that according to the plan, Beijing Hyundai plans to achieve a production and sales target of more than 500,000 vehicles in 2025, including more than 100,000 vehicles for export, and to create a complete electric vehicle product matrix by 2027.

Qi Xiaohui said that in the next three to five years, Beijing Hyundai hopes to stabilize its sales volume in the Chinese market at 300,000 vehicles.

source:Daily Economic News