The only company that sells cars for listing is facing difficulties because the car company imposes new standards

April 18, 2022 07:07 GMT+7

Hang Xanh Automobile Service Joint Stock Company (HAX) is one of three official distributors of Meredes luxury cars in Vietnam along with two other competitors, An Du and Vietnam Star. However, HAX is the only company in the auto distribution industry to officially list shares on the stock exchange.

HAX’s 2022 shareholder meeting recently showed that the company’s profit may peak in the next two quarters, but it is difficult to continue to maintain this level in the following quarters. The reason is that Mercedes is tightening standards for dealers, putting pressure on the company to raise capital significantly to expand showrooms, thus diluting profit growth in the near term. In addition, the impact of worsening chip shortages could result in lower revenue growth for 2022 and 2023.

Although HAX’s profit was hit hard in 2021 due to social distancing to prevent the epidemic, the company had a strong recovery in the fourth quarter of 2021, when this quarter contributed up to 39% of total revenue and 78 percent of total revenue. % net profit for the whole year. The significant pent-up demand in the previous quarters and the Government’s support to reduce registration fees by 50% under Decree 100/2021/ND-CP from November 2021 were the main factors helping the business results to recover. impressive in the fourth quarter of 2021.

However, the chip shortage worsened, causing the company’s revenue in the first quarter of 2022 to be estimated at VND 1,290 billion, down 10% over the same period.

HAX management explained that the worsening global chip shortage affected the supply of imported Mercedes models (accounting for about 10-15% of HAX revenue), while locally assembled models remained unchanged. enough to meet new orders, although customers need longer waiting time than usual (2-3 months).

According to Mercedes’ new standards, Haxaco Kim Giang showroom will not be up to standard.

In terms of net profit, the company’s profit margin continued to improve significantly from last year’s average due to high profit margin per vehicle during the period of scarcity of luxury cars due to customers constantly bidding higher prices or buying more. some other maintenance package from the dealer to be able to receive the car sooner.

According to HAX management, Mercedes is increasingly tightening showroom requirements for Vietnamese dealers to catch up with Mercedes standards in the region, which ensures two factors: minimum floor area of ​​each showroom and Quality design and service in showroom. Therefore, Mercedes recently urged HAX to soon upgrade 2 showrooms: Vo Van Kiet in Ho Chi Minh City and Kim Giang in Hanoi, because HAX’s market share has reached 40%, this is the highest market share figure for a Mercedes dealer located in a global market.

To meet the standard, HAX will have to raise significant capital. The AGM recently approved a resolution to issue a 1:1 purchase right to existing shareholders of HAX at the price of VND 12,000/share. The new capital will finance HAX’s ambitious plan to build an 18-storey Mercedes showroom in Ho Chi Minh City with a total investment of nearly VND 1,000 billion and become the largest car showroom in Vietnam.

While HAX is planning to expand, other Mercedes dealers including Vietnam Star, An Du and Vinamotor have been rapidly upgrading the size of showrooms, most of which are large showrooms opened: Vinamotor Nghe An (11,583 m2 – opening in 2020), Vietnam Star Binh Duong (7,600 m2 – 2020), An Du Quang Ninh (4,400 m2 – 2020), Vietnam Star Hanoi (3,000 m2 – expected in 2023).

Other competitors in the same industry, especially Thaco (BMW’s main dealer) are also expanding rapidly to gain more market share in the luxury car segment. In just 4 years since signing the contract with BMW, Thaco has opened a total of 7 BMW showrooms nationwide and is planning to open 15 more showrooms by 2025. BMW’s sales are also tending to increase. faster in 2020 and 2021.

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