(Yicai Global) May 16 -- Pang Da Automobile Trade’s shares sank by its exchange-imposed daily trading limit after the Chinese auto dealer announced its inevitable delisting from the Shanghai Stock Exchange.

Pang Da [SHA: 601258] ended 5.4 percent lower at 53 Chinese cents (8 US cents) a share today, after slumping to 56 Chinese cents yesterday.

Stocks should be booted from Chinese mainland exchanges if their price stays below CNY1 for 20 straight trading days, according to regulations. Though Pang Da closed below CNY1 for only 13 trading days, its cannot recover to CNY1 in the next seven trading days even if it climbs by the 5 percent limit each day, so it will be delisted, the Beijing-based firm said yesterday.

Founded in 2003, Pang Da’s main business is auto sales and after-sales service. Last year, the company’s revenue fell 9.1 percent to CNY26 billion (USD3.7 billion) from the year before. It also turned a CNY898 million (USD129 million) net profit into a CNY1.4 billion (USD200 million) net loss.

Pang Da was China's largest car dealer, with nearly 1,430 auto 4S car dealership stores nationwide in 2012. But due to debt management, a high leverage ratio, and an inability to pay off due debts, it declared bankruptcy in May 2019 and began a reorganization that was completed in the December. By the end of 2022, it had only 267 stores. 

Other car dealers have also been struggling in recent years. Last year, the proportion of loss-making dealers in China was 45.2 percent, with only 30 percent in profit, according to a report by the China Automobile Dealers Association in March.

Editor: Futura Costaglione