Tianjin Yonghao Group Co., Ltd. (Yonghao Group) issued a statement on November 17th, announcing that due to a recent withdrawal of loans by a collaborating bank, the company’s fund chain has broken, resulting in the inability to deliver vehicles to customers in a timely manner and to fully pay employees’ salaries for the past three months.
According to Caixin website on November 18th, Yonghao Group acts as the agent for automobile brands such as Audi, Hongqi, and Dongfeng Honda. Recently, the sudden closure of 4S stores of the aforementioned brands has sparked various rumors online about Yonghao Group: “Boss Wang Xuejun has fled abroad with money,” “All vehicles in the warehouse of the 4S store have been transferred,” “Customers who paid 800,000 at Yonghao Audi cannot get their cars,” and more.
In response, Yonghao Group stated that these rumors are all untrue: Wang Xuejun has not been involved in any illegal activities nor has he “taken money and run.”
Regarding concerns about vehicle transfers raised by consumers, Yonghao Group explained that all vehicles in the Audi brand 4S store were taken away by a bank because Yonghao Group had financing from that bank, but the vehicles had not been sold yet, so there was no situation where consumers paid for a car at the store but could not get it. Additionally, vehicles of the Dongfeng Honda brand were unilaterally taken away by the bank, and Yonghao Group has reported this to the authorities.
Yonghao Group also mentioned that the company is working hard to raise funds to deliver vehicles to customers and pay employees’ salaries.
In China, automobile dealers heavily rely on banks for fund circulation. After acquiring dealership authorization from automobile brands, dealers need to pay a deposit to the brand and purchase vehicles. Only after selling the vehicles can dealers retrieve their funds and earn profits.
This dealership model means that once dealers encounter financial problems or banks withdraw loans, the fund circulation chain breaks. Banks, concerned about non-repayment of loans, may take away vehicles used as collateral, leaving purchased customers unable to receive their cars and only able to resort to complaints and rights protection, causing dealers’ businesses to spiral into a vicious cycle, making it unsustainable.
Previously, due to several years of rapid growth in the Chinese automobile market, automobile dealers expanded on a large scale. However, from 2018 to 2020, Chinese automobile sales declined for three consecutive years, particularly since 2023, where an intense price war erupted in the automobile market, making it increasingly difficult for dealer groups to operate, leading to occasional cases of broken corporate fund chains.
At the China Automobile Distribution Industry Annual Conference on November 7, Xiao Zhengsan, president of the China Automobile Distribution Association, stated that in the first three quarters of 2024, the total retail sales of automotive consumer goods reached 3.5361 trillion RMB, a 2.1% decrease year-on-year. The retail volume of the Chinese passenger car market was 15.574 million vehicles, a 2.2% increase year-on-year. Xiao Zhengsan analyzed, “The contrasting data between these two figures indicates that the automobile industry is showing characteristics of increased quantity but not increased revenue, and increased revenue but not increased profits.”
Xiao Zhengsan also noted that the pricing war among car manufacturers has led to dealers buying cars at a higher price than the selling price, resulting in more losses the more they sell. The recent halting of automobile dealerships is mostly due to liquidity issues, which are not directly related to whether the businesses are operating compliantly.
The news has sparked heated discussions online. A netizen named “Xiaobona Xiaoleibailun” expressed, “Previously worried about incomplete housing, now buying cars also involves worrying about incomplete cars. Forget it, stay at home, drink cola, watch TV dramas, and stop consuming.”
Another netizen, “Dingman,” stated, “With the economic downturn, banks are also in a tough spot, worried about bad debts and delinquent debts.”
Netizen “If So” believes, “So as long as banks are willing to lend to Vanke, it will not die.”
Public records show that Tianjin Yonghao Group Co., Ltd. (formerly known as Tianjin Yonghao Investment Group Co., Ltd., Tianjin Yonghao Investment Development Co., Ltd.) was established on May 24, 2007, with its registered address at No. 462 Changjiang Road, Nankai District. The legal representative is Wang Xuejun. Currently, Wang Xuejun holds 96.25% of the shares of the group.