GAC Gonow faces ire of dealerships

Representatives of nearly 50 car dealerships demonstrated in front of GAC Gonow's headquarters in Hangzhou, Zhejiang province, on Tuesday.

A public letter posted by the dealers online said the carmaker has stopped providing cars since March 2015, causing heavy losses for dealers, even after representatives for dealers held negotiations with the company management on March 15.

In the letter dated May 9, the dealers requested the automaker solve its after-sales problems, buy back unsold cars and spare parts and compensate the dealers for their losses including the costs for rent and promotions.

They demanded a reply by the noon of May 10 and threatened to "take action of which the consequences the automaker should be held accountable for".

GAC Gonow did not comment by press time.

The letter came two days after the automaker issued a statement to its dealers that all its equipment, real estate property and plants have been mortgaged to banks to pay off debt that had been accruing for years.

Last year, the automaker sold 11,438 cars, a 55.43 percent nosedive from the previous year, while China's passenger car segment saw an overall growth of 7 percent year-on-year.

News portal Tencent.com reported that the automaker's production lines were almost closed throughout 2015 after GAC made public its plan in March 2015 to make the automaker a wholly owned subsidiary to help produce its Trumpchi cars and SUVs, both of which sell well in the market.

Trumpchi sold 79,400 cars in the first quarter this year, a 171-percent surge year-on-year, and the automaker said it will launch at least six new models this year.

It sold nearly 200,000 units in 2015. The sales could have been higher if it could produce more, said head of the brand Wu Song.

GAC Gonow was established in 2010 as a joint venture between GAC and Gonow, with the latter holding a 49 percent stake.

Two months ago GAC made it clear in a statement that it would acquire the 49 percent stake at 262 million yuan ($40.2 million) and spend another 3.5 billion yuan to enhance the carmaker's production facilities.

That is part of GAC Group's effort to realize a goal set in 2014: to expand the annual production capacity of its Chinese brands, Trumpchi, Gonow and ZX, to 1 million units by 2020.

Zeng Qinghong, the group's general manager, said Trumpchi sold well in 2015 and urged the other two brands to better integrate and utilize their resources this year.