Licensed distribution In the future, the automobile sales model will show a diversified coexistence pattern

In 2021, the field of automobile circulation is undergoing "fission": the rapid development of new energy vehicles has promoted the establishment of new sales models, new sales models such as direct sales and agents have emerged and achieved rapid development, and major car companies have set off a "storm" of direct sales models. Among them, including Tesla, Weilai Automobile, Xiaopeng Automobile, Feifan Automobile, Extreme Krypton Automobile, Dongfeng Lantu, BAIC Jihu, Volkswagen, Ford Mustang, Volvo, etc. from the "new car-making forces", independent brands, joint venture brands and other camps have "tested the waters" and made efforts to direct the model.

With the direct operation model "blossoming everywhere" in the country, the competitive relationship between the direct operation model and the traditional dealer model has also become a hot topic of discussion in the industry. Will the traditional dealer system be impacted by the new sales model of automobiles? Will the traditional licensing business model be replaced by new sales models such as direct sales in the future? What kind of new development formats will be presented in the field of automobile circulation in the future? Recently, on related issues, a reporter from China Business Daily exclusively interviewed Shen Jinjun, president of the China Automobile Dealers Association, who expressed his unique views as a senior expert who has been immersed in China's auto industry for many years.

Car distribution model fission

China Business Daily: According to the China Automobile Dealers Association's "2020-2021 China Automobile Circulation Channel Development Report", in 2020, the number of authorized 4S dealers in the country showed negative growth for the first time in history, the number of 4S store networks fell to 28,000, and a total of 3920 4S stores were withdrawn throughout the year, with an average number of exits exceeding 10 in a day. What do you think of the above phenomenon? More and more traditional 4S stores are withdrawing from the market, does it mean that the direct sales model opened by car companies such as new car-making forces is further squeezing the living space of dealers? In the face of new industrial development formats, how should traditional car dealers respond?

Shen Jinjun: 2021 is a year for the automobile circulation industry to cut through thorns and turn around and change. Affected by the continuous spread of the epidemic, supply chain problems and other factors, the market supply and demand relationship has undergone a reversal, on the one hand, the profitability of dealers has increased due to the impact of market prices; on the other hand, dealers are in an embarrassing situation of no car to sell.

More importantly, the traditional automobile sales model is facing an unprecedented test, automotive products and technologies are changing, the market structure is changing, consumer demand is changing, and channels are bound to change. Whether it is the new car-making forces represented by Tesla and "Wei Xiaoli", or the electric vehicles of traditional car brands, or the fuel vehicles of traditional car brands, they are all innovating channels, testing sales models such as direct operation or agency, exploring multi-channel marketing, and finding a balance between user experience and cost efficiency.

At the Annual Meeting of the Haikou Industry of the China Automobile Dealers Association from December 2 to 3, 2021, 2,000 representatives of dealer groups voted on the future model changes of the channel, of which 67.5% of the guests believed that the future will be based on the authorized distribution model, and the direction of coexistence of multiple models will be developed.

I believe that whether it is direct operation or agency, it is not an innovative format in the automotive industry as a whole. Since the 1980s, car sales have been official, using direct sales. Therefore, there is no such thing as a so-called direct sales model that is further squeezing the living space of dealers. However, in the face of new industrial development formats, traditional dealers should practice their internal skills, improve quality and efficiency, and better serve consumers.

At present, the traditional automobile sales model is facing an unprecedented test, how to further play and make good use of the advantages of existing channels in terms of efficiency and system, manufacturers and dealers need to face together with an open and inclusive attitude, uphold the concept of consultation, co-construction and sharing, and open a new situation in the changing situation.

China Business Daily: At present, in the face of multiple changes in the supply side, channel side and market demand of the automobile market, expanding the profit model through digitalization has become one of the important capabilities of dealers. However, according to the "2021 China Auto Dealers Digital Transformation Report" released by the China Automobile Dealers Association, less than 20% of the dealer groups currently have a well-developed user data platform and a market-oriented social user interaction platform; only 10% of dealer companies can achieve information exchange. In your opinion, when carrying out digital transformation, how should dealers solve the difficulties and blockages facing the current development?

Shen Jinjun: In the era of the new four modernization trends in the entire automotive industry, the efficiency of the original traditional sales methods of handing out flyers and making phone calls is obviously not up to date. If it can be based on big data research, it is definitely a development trend for dealers to reduce costs and increase efficiency. Moreover, more and more dealers realize that with the continuous increase in the proportion of new energy vehicles, changes in channel models, and increasing diversification of consumer demand, accelerating the process of digital transformation is the key to grasping the real core assets and core competitiveness.

However, the difficulty now is that the current digital construction of dealers is mostly limited to the digital recording of the business process, lack of understanding of users, and lack of planning and ability to consider digital construction from the overall situation. Therefore, the lack of professional digital talents is also one of the key crux of the digital transformation that plagues dealer groups, especially for dealer digital project management, customer operation, market operation and other levels. Most of these talents are in upstream OEMs or in major Internet companies, and such talents in the dealer field are extremely scarce.

The "low-profit era" car dealers are facing a major test of transformation

"China Business News": According to the "Survey Report on the Survival of National Automobile Dealers in the First Half of 2021" released by the China Automobile Dealers Association, in the terminal market, only 30% of the car dealers completed more than half of the annual sales target in the first half of the year. According to the "Survey Report on the Survival of Dealers in the First Half of 2021" released by the China Automobile Association, the proportion of dealers who achieved profitability in the first half of the year was only 33.6%, a year-on-year decline of about 6%. Based on the current about 30,000 dealer outlets in the country, about 1,800 dealer stores gradually lost profitability in the first half of the year. In your opinion, in this "era of small profits", how should traditional car dealers better survive and how to transform?

Shen Jinjun: From the perspective of the automobile market in 2021, from January to November 2021, the cumulative sales of passenger cars were 18.863 million units, an increase of 9.3% year-on-year, the total retail sales of social consumer goods in November were 377.7 billion yuan, an increase of 12.4% month-on-month, and the total amount of social zero from January to November was 3,921.5 billion yuan, an increase of 9.7% year-on-year. Although it has entered the "era of low profits", as long as dealers do a good job in fine management, seize the improvement of user after-sales maintenance services, and develop the business development of the second-hand car sector, they will be able to continue to survive better.

China Business Daily: At present, for auto dealer groups, the improvement of their own profitability has reached an era that requires deep ploughing. Among them, the used car business is indispensable, and used cars are one of the business segments with the greatest growth potential of dealer groups. In your opinion, if the traditional car dealer group wants to really do a good job in the used car business, what aspects should it make efforts?

Shen Jinjun: Judging from the policy dividends in recent years, especially in 2021, China's second-hand car market ushered in a major positive, since the promulgation of the "Announcement on Clarifying Several Value-added Tax Collection and Management Issues such as Second-hand Car Distribution" on March 31, 2020, the relevant government authorities have successively issued the "Guidelines for Promoting Automobile Consumption in the Commercial Field" and "Notice on Promoting the Registration of Used Car Transactions Across Provinces to Facilitate Second-hand Car Off-site Transactions" and other policies. The "inter-provincial general office" of second-hand cars has been fully implemented, and from the institutional aspect, efforts have been made to solve the problems of inconvenient second-hand car transactions and long transfer cycles, which has promoted the long-term development of the second-hand car industry.

We expect that the second-hand car transaction will exceed 17 million in 2021, and the revitalization of the stock and the promotion of consumption are the top priorities of dealers, especially in the second-hand car retail sector. Because for dealers, used car retail can have autonomy, their own pricing, and the sale of new cars is priced by manufacturers; at the same time, do a good job in second-hand car retail business, more can promote the development of new car replacement business, so as to complete the consumer from the new car - used car - new car closed-loop full life cycle tracking and long-term service, increase stickiness.