Harmony Auto increases bad debt allowance by ¥139.6m

China Harmony Auto Holding Limited ("Harmony Auto") recognized an additional expected credit loss (ECL) of ¥139.6 million on advances and interest receivable from an Independent Aftersales Company ("IAC") for the year ended December 31, 2024. This increase stemmed from IAC's deteriorating financial position, exacerbated by intense competition in the new energy vehicle market, which impacted its earnings and cashflow generation. As of December 31, 2024, IAC's net liabilities attributable to owners grew to approximately ¥855 million, despite efforts to optimize operational efficiency.

The total ECL allowance for IAC reached ¥712.4 million as of December 31, 2024. The calculation incorporated an exposure at default (EAD) of ¥864.7 million, a 100% probability of default (PD), and a loss given default (LGD) of 82.4%. This LGD increased from 68.9% in 2023 due to the prolonged overdue period. After accounting for the ECL allowance, the carrying value of advances and interest receivable from IAC in Harmony Auto's consolidated financial statements was ¥152.3 million as of December 31, 2024, projected to rise to ¥169.0 million by June 30, 2025, primarily due to accrued interest.

Harmony Auto also announced that it received aggregate repayments of ¥40 million from IAC on October 9 and 10, 2025, and remains committed to recovering the outstanding balance.