Lantian Group Implements Company-Wide Pay Cuts and Salary Suspensions

[Company Update] Lantian Group, a top-100 automotive dealer, has implemented company-wide pay cuts and salary suspensions due to significant losses in Q2.

Key Developments: Executive Salaries Halted from July; Frontline Staff Receive Only 70%

Impacted by a sales decline exceeding 20%, Lantian Group’s investors can no longer sustain payroll through continued lending. Starting in July, all managers and above at the group headquarters and loss-making outlets will have their salaries fully suspended, while frontline active employees will receive only 70% of their regular pay. Concurrently, the company is intensifying its bottom-performer elimination policy.

Strategic Rationale: Aggressive Cost-Cutting Triggered by Failed Restructuring

At the end of June, the group invested RMB 50,000 in an enterprise-wide operational restructuring training program, but results fell short of expectations. This prompted an abrupt shift to extreme payroll controls, revealing severe cash flow distress bordering on insolvency.

Industry Impact: Mounting Legal Risks and Eroding Sector Confidence

The unilateral suspension of salaries has drawn widespread criticism. Industry observers widely agree this move carries clear labor law compliance risks, with high likelihood of employee arbitration victories—further deepening the trust crisis across the automotive retail sector.