On September 1st, after the opening of Zotye Auto’s stock market, it soared in a straight line and hit the daily limit. On the same day, the company announced that its subsidiary production line had been dismantled, crushing hopes of resuming production this year. This car manufacturer, once known as the “ancestor of knockoff cars” in the market, reported a net loss of 1 billion yuan in 2024, selling only 14 cars throughout the year. The total compensation for executives reached 9.5491 million yuan, sparking widespread criticism.
Analysis suggests that China’s recent so-called bull market is disconnected from the company’s performance and the overall economic fundamentals.
On September 2nd, Daily Economic News reported that in the stock market, Zotye Auto saw a significant surge on September 1st, with the stock closing at 2.83 yuan, giving it a market value of 14.27 billion yuan.
However, this surge is in stark contrast to the company’s financial situation. The company’s 2024 financial report revealed that the total car sales in 2024 were only 14 vehicles, a staggering 98.74% decrease year-on-year, with zero production and a stockpile of 336 vehicles. The company’s annual revenue was only 558 million yuan, a 23.96% decrease year-on-year, while the net profit attributable to shareholders of the listed company incurred losses of 1 billion yuan, a 6.82% increase in losses from the previous year.
In response to this, Chinese issues expert Wang He told Epoch Times that the current bull market is a manifestation of a larger problem, as some small and micro-cap stocks and delisted stocks are surging rapidly while many blue-chip stocks are not seeing significant increases, indicating that this stock surge is solely driven by capital.
Wang He further stated, “The surge to 3800 points in the stock market this time has no connection with the fundamentals of the entire Chinese economy, nor does it have much to do with the performance of many companies. Behind this surge, there are many insider dealings, artificial operations, and a lot of people are once again cutting the grass.”
In the investor interaction section of Oriental Fortune, netizens also raised doubts: “10 billion in losses, yet the stock price hits the limit up, are retail investors catching falling knives?” These discussions attracted hundreds of thousands of views. Some users called on the Securities and Exchange Commission for an audit.
On the evening of September 1st, Zotye Auto announced that the T300 model assembly production line and related equipment located in Chongqing under its subsidiary, Hunan Jiangnan Auto Chongqing branch, had been forcibly auctioned and dismantled by a local court, officially declaring the impossibility of resuming production in 2025.
According to the announcement, the Chongqing Bishan District Court conducted two judicial auctions of Zotye Auto Chongqing branch’s T300 model assembly production line, both resulting in no successful bidder. The court then initiated forced enforcement procedures requiring the dismantling and vacating of the production line and related equipment by September 15th.
As of August 29th, the construction team had entered and dismantled some equipment, including the paint booth and PDI inspection line. This means that Zotye Auto has lost the hardware conditions to resume mass production of the T300 model, completely shattering the 2025 plan for resumption of work and production.
This announcement once again shocked the market. After the stock market closed on September 1st, China Business Network contacted Zotye Auto’s investor hotline in an attempt to seek clarification. The response indicated that Zotye Auto’s main business is still vehicle manufacturing, and the aforementioned Chongqing T300 production line was leased by Zotye Auto. The company owns two production bases, in Changsha and Yongkang.
Currently, both of these production bases have ceased operations, and it is indeed impossible to resume production this year. The possibility of resuming production in the future is uncertain. The response also confirmed, “Currently, Zotye Auto no longer has any 4S dealerships in operation domestically.”
Zotye Auto, known as the “knockoff Porsche” in the private sector, achieved sales of over 300,000 vehicles in both 2016 and 2017 by imitating well-known brand models and employing a low-price strategy.
However, this golden period was short-lived. Starting in 2018, the company’s sales plummeted sharply, dropping to 154,800 vehicles in that year, and further diminishing to 21,000 vehicles in 2019. After the company’s restructuring in 2022, it attempted a revival through product and market adjustments but struggled due to intense market price wars and intensified internal competition.
Despite the company’s operational challenges, the executive compensation at Zotye Auto remains high. According to the company’s 2024 annual report, the total compensation for directors, supervisors, and senior management reached 9.5491 million yuan in 2024, representing a 61.45% increase year-on-year.
Among them, Chairman Hu Zeyu received a pre-tax compensation of 1.9659 million yuan, while Vice President Yin Xuefeng earned a yearly salary of 1.8361 million yuan, with the two accounting for nearly 40% of the executive salaries. This stark contrast between executive compensation and the company’s sale of only 14 cars raised strong doubts among investors.
In May of this year, an investor asked on the investor interaction platform, “I wonder, why did Zotye Auto incur a loss of 1 billion yuan in 2024 when they didn’t produce much?”
In response, Zotye Auto stated that in 2024, the company made a provision for asset impairment of approximately 1.014 billion yuan, which was the main reason for the loss.
Investors generally distrust such explanations, calling them a “fig leaf for shame.”
User “xianghuang” reposted a comment on platform X, saying, “Chairman Hu’s salary seems like a prelude to shareholders cashing out. Last year, Zotye’s top ten shareholders had a pledge rate of over 90%, playing capital games skillfully. A high pledge rate indicates that shareholders had long wanted to cash out and exit, and high executive salaries are just a last hurrah.”