GAC Gonow may stop production due to insolvency

Release time:2016-06-08 (Shanghai June 6th)– GAC Group planned to spend around ¥3.571 billion to buy the remaining 49% stake in GAC Gonow, which was a joint venture co-owned by GAC and Gonow, and make it an wholly-owned subsidiary of the group, according to an announcement released by the company on March 18th. Besides, GAC group has confirmed that the new Gonow will focus on the development of several new sedan and SUV models, and later renamed the company to GAC Group Passenger Vehicles (Hangzhou) company.

However, shortly after the group’s purchase announcement, some of GAC Gonow dealers initiated a “right protection”, requesting GAC Gonow to provide economic compensation for their losses and take responsibility accordingly. Looking back, GAC Gonow has been struggling to make car deliveries on time to the dealers since last March and even failed to complete delivery, which led to large-scale losses of the dealers. What’s worse, GAC Gonow also stopped providing spare auto parts for Gonow models, making it impossible for the car owners to get any aftersales service.

Those car dealers were told that GAC Gonow has suffered losses over several years successively, due to under investment and poor products positioning, and this insolvent company has already pledged its lands, plants and facilities to the banks.

But things are getting better. It’s reported that GAC Gonow could provide main parts now and will recover the provision of most parts since June to solve after-sales problem to a maximum extent. Besides, the 400 after-sales hot line has been opened and provides 24 hour customer service.

Fundamentally speaking, the future of GAC Gonow is nothing near promising. The further development of Gonow brand needs large commitment financially for a long time, due to its low brand awareness. GAC group may better just cut off Gonow and turn to Trumpchi, a promising GAC brand, for further development.

It seems GAC group will still need more time to achieve its goal of promoting all three of its domestic brands, including Trumpchi, GAC ZXAUTO and Gonow, comprehensively.