Cango Newsletter 20230922

Date: 2023-09-22

Cango Newsletter 20230922


Cango (NYSE: CANG) is a leading automotive transaction service platform in China, connecting dealers, financial institutions, car buyers, and other industry participants. Follow us on Twitter ( for updates.


Below please find our latest Cango newsletter. Our goal is to share the most newsworthy articles in today’s macro economy, auto industry, as well as our recent developments. Below please find the abstract and news link for more details.

Macro Economy

1. Property Tax Legislation Delayed, Possible to Further Ease Individual Tax Burdens

China recently publicly released legislation under the 14th National People’s Congress (NPC) Standing Committee (the “Program”). With respect to finance and taxation, the Program expressly states the Value-Added Tax Law, the Consumption Tax Law and the Tariff Law will be submitted for deliberation during the current term of the incumbent NPC Standing Committee. However, the long-awaited property tax legislation and the Individual Income Tax Law amendment are not yet included in the Program. Multiple finance and taxation experts have indicated that the delayed introduction of the Property Tax Law is mainly due to domestic economic considerations, with a progressive rollout expected when conditions become more optimal. [Link]

2. August Economic Data Improves, Restoring and Expanding Demand Remains the Key to Recovery

Following a decline in major macroeconomic indicators in July, a series of policies were implemented to expand domestic demand, boost consumer confidence and mitigate risks to stabilize economic growth. In August, economic data showed signs of improvement, surpassing market expectations. Both the industrial and service sectors’ output accelerated, and domestic demand continued to expand. Multiple experts’ analyses have shown that key economic metrics improved in August, both year-over-year and month-over-month, as adjusted seasonally, indicating that policy measures have started to pay off. However, issues such as insufficient demand and business’s operational difficulties have yet to see material improvement. With the implementation of comprehensive reserve requirement ratio cuts, the next steps will likely involve the government increasing growth stabilization policies, especially in fiscal policy adjustments, and the accelerated implementation of policies that support the real estate market. [Link]

3. Aggressive Reserve Requirement Ration Cut; Further Policy Support Expected in September

On September 14, China’s central bank cut the financial institution reserve requirement ratio (RRR) by 0.25 percentage points. On September 15, the PBOC’s decision on medium-term lending facility (MLF) loans resulted in a net RMB191 billion of fresh fund injections into the banking system. The MLF rate remained unchanged from the previous period at 2.5%, while the interest rate on 14-day reverse repurchases was 1.95%, down 20 bps from the prior period. According to statistics, since 2014, the PBOC RRR cuts have generally exceeded 50 bps. In line with the three previous cuts enacted since April last year, the most recent cut was relatively moderate at 25 bps, applied globally to all banks. The RRR cut is expected to release an estimated RMB590 billion in long-term funds. With RMB400 billion worth of MLF loans set to expire on September 15, this renewal injected RMB591 billion into the market, ensuring released funds from MLF operations exceed the amount of funds set to expire. The RRR cut and MLF renewal infused funds in the market, totaling approximately RMB780 billion. In addition, owing to the Mid-Autumn Festival and National Day holidays beginning September 29, coupled with end-of-quarter factors, the PBOC re-initiated 14-day reverse repurchase operations. The interest rate for 7-day reverse repurchases has decreased by 20 bps since the beginning of the year, and the 14-day reverse repurchase rate also declined by 20 bps, which generally aligns with overall expectations. [Link]

Automobile Market

1. Tier-2 Emerging Car Companies in Crisis: RMB10 Billion in Financing Exhausted, Leaving Production Facilities Idle

Starting in 2023, tier-2 emerging automotive companies, such as Aiways and WM Motor, which had already completed mass production and delivery, encountered severe operational crises. Factories ceased production, employees faced widespread salary arrears and frequently resigned, with almost all sales and service outlets shutting down. Following the bankruptcy of companies like Byton and Singulato, known as "PPT carmakers," tier-2 emerging automotive companies that had successfully transitioned to mass production faced an exceptionally fierce shakeout. Cui Dongshu, Secretary General of the China Passenger Car Association, stated that the year’s complex market conditions may accelerate the closures of weaker brands with smaller sales volumes and cash crunches. [Link]


2. Xpeng and NIO: Back to the 4S Model

The relationship between the automotive industry’s agency distribution model and direct sales model, which have long been balancing each other out, is undergoing a distinct reversal. In early September, domestic automaker XPeng, often likened to Tesla, began recruiting more dealership agents. This year, brands like NIO, Zeeker, Voyah and Lynk & Co have adopted similar approaches. Behind this shift, drawbacks of the previously popular direct sales model are gradually coming to light. Today, an increasing number of Chinese new energy vehicle companies have realized that rather than direct operations, the key to the new distribution model lies in direct sales. Once the model matures, OEMs replicate it among distributors. On the other hand, OEMs need to focus on establishing standards and management rather than getting involved in the minutia of every individual store’s sales scenarios. [Link]


3. New Energy Vehicle Giants Caught up in APP Melee

BYD recently rolled out an independent APP for its sub-brand, FANGCHENGBAO, offering services, including vehicle purchase, driving support, etc., for car owners. As part of the BYD brand matrix, FANGCHENGBAO offers prospective car owners new energy vehicle models. FANGCHENGBAO APP's existing service offerings include test drives, vehicle purchase, vehicle customization, and car owner communication features, which are similar in functionality to other domestic new energy vehicle brands’ APPs. It is also worth noting that not long ago, BYD officially announced that the BYD Car App/mini-program had been upgraded and split into two separate operating systems: BYD Dynasty App/mini-program and BYD Ocean App/mini-program, both of which operate independently. [Link]

Cango News

1. Forging Ahead with Digital Innovation – Cango Wins CDI Product Digital Innovation Award [Link]

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