In recent years, with the introduction of favorable policies such as the lifting of relocation restrictions, tax reform and the "inter-provincial general office" of second-hand car transfer registration, second-hand cars have entered the fast lane of development. As an important carrier of the used car business, major car dealer groups are also paying more and more attention to the used car business. At present, only by forming a mutual growth with the new car business can the second-hand car business help 4S dealers achieve a new leap forward.
Data from the China Automobile Dealers Association shows that the old-to-new ratio of the top 100 domestic dealer groups has increased from 13.07% in 2017 to 18.35% in 2020, showing a continuous upward trend.
As a representative of the domestic regional automobile dealer group, United Group has been laying out the second-hand car business since 2015, and in terms of second-hand car retail, United Group has invested a lot of energy, and has formed three outlets in the south, north and west districts and a hypermarket layout in Zhengzhou, and the outlets have established the "FAW-Volkswagen official certified used car" showroom. In the future, United Automobile will also lay out more outlets in Henan Province to serve users in the province.
At the end of 2021, we held a dialogue with Hou Yaxia, General Manager of Anxin Used Cars of United Group, for the operation of used car retail.
The used car business must have the ability to survive independently
Hou Yaxia, general manager of Anxin used car of United Group
In Hou Yaxia's view, used cars are the same important growth business as new cars, especially used car retail, which has greater imagination space and growth space than wholesale business, and is also an important profit contribution sector of the group in the future.
However, on July 20 this year, Zhengzhou experienced an unprecedented heavy rainstorm, which damaged nearly 400,000 cars; this year's chip shortage also led to some of the most popular models without cars to sell. These factors have all had an impact on the used car business this year.
Hou Yaxia believes that the dealer group to strengthen the second-hand car retail business is a very key point, that is, to get rid of the dependence on the store when receiving the car, the replacement car source of the store is more used for wholesale business, only to increase the amount of external procurement, improve the quality of retail car sources, so as to improve the ability to survive independently.
SG-Auto: 2021 is coming to an end, what is the acquisition channel and overall acquisition status of United Used Cars?
Hou Yaxia: The layout of The used car business of United Group is mainly divided into three channels, namely, the replacement car source of its own 4S store, the used car source manufactured by itself (the car that the leasing company expires) and the external car source.
This year's replacement car supply has not improved, affected by the shortage of chips, the group's new car sales declined, the acquisition of second-hand cars was also affected, last year the store replaced about 2500 cars, so far this year the replacement volume is more than 2000 units.
Although the number of store replacements has declined, the overall number of used car acquisitions this year still increases, the reason is that we began to lay out the external mining capacity in October last year, formed the outsourcing team and expanded the external mining channels, after this layout, this year there was some effort in outbound mining, supplementing more than 700 cars. Using the manufacturer's platform bidding and outsourcing, the number of cars received from this year to the present has increased by 16% compared with last year.
SG-Auto: How much can the replacement rate of Volkswagen brands be?
Hou Yaxia: Our Volkswagen brand replacement rate can be about 35%.
SG-Auto: When did the heavy rains in Zhengzhou start to affect used cars?
Hou Yaxia: The heavy rain in July is indeed something that has never been experienced before, and there are many customers who change cars due to damage. However, in August and September, it is not too obvious, because many damaged vehicles are still in the maintenance stage, and many customers want to observe it after repairing, but gradually find that there will still be some problems in the process of using the car, so the number of water soaking cars replaced by the store after October began to increase.
SG-Auto: Will water soaking cars still enter United's retail vehicles?
Hou Yaxia: Resolutely can not enter the retail channel, does not meet the group's retail standards. The soaking car will have a taste that is difficult to eliminate, and there will be some problems with electronic equipment, and the hidden dangers of the vehicle are relatively large, so they are all disposed of wholesale.
SG-Auto: The implementation of policies such as the second-hand car tax reform and inter-provincial communication office has put forward new requirements for the development of the used car business of United Group?
Hou Yaxia: After the implementation of the tax reform, the management of the financial aspects has become more standardized, especially the transfer of public households to public households, the procedures should be carried out with the official seal, and will no longer be placed under the personal name, and the industry will also move towards compliance, which we have to adapt to.
SG-Auto: Has used car retail now shifted to a distribution model?
Hou Yaxia: We now belong to the switching stage, and the distribution model and the economic model account for half of each. At this stage, if it is completely converted to distribution, the cost is too high after all. But we're also prepared and familiar with the various processes of the distribution model, and if we need to adjust everything in the future, we can quickly switch over.
SG-Auto: What is the current batch-to-zero ratio of United Used Cars?
Hou Yaxia: This year's batch zero ratio can be about 6:4, and in some months, it can be five and a half. In fact, wholesale and retail are closely related to the car source, the replacement car source of the store is more wholesale, but the store car source declines, to carry out external procurement, so the retail ratio will increase.
SG-Auto: Are the sources of vehicles mined for retail?
Hou Yaxia: Yes. The store does the replacement business, all the vehicle sources must be collected, the age of many vehicles, the number of kilometers are relatively large, and the car condition cannot be controlled, so they are wholesale disposal. However, the external mining itself is based on the purpose of retail, and the selection of vehicle sources with short years and less mileage can be controlled. It is impossible for you to have an advantage in taking out a car for 8 or 10 years and coming back for wholesale.
SG-Auto: How much more can wholesale and retail do each month combined?
Hou Yaxia: About 300 units. These two months compared with the same period last year is declining, retail is much more difficult than wholesale, retail needs to be prepared capacity, customer collection ability, many aspects for the entire team is a relatively large test.
SG-Auto: Is retail centralized in stores or divided into stores?
Hou Yaxia: We have three retail showrooms in Zhengzhou, a hypermarket, and a retail showroom in Xinyang. The retail exhibition hall is located next to the 4S store, which is relatively small; the hypermarket is independent, with an area of more than 2,000 square meters.
SG-Auto: Is the retail business now multi-branding?
Hou Yaxia: The retail showroom is basically a single brand operated by 4S stores, mainly Volkswagen, which is built according to the standards of the manufacturer's second-hand car system. Hypermarkets bring together the Group's Brands of Volkswagen, Jetta, Lynk & Co and Volvo.
SG-Auto: Why aren't brands outside the group considered?
Hou Yaxia: At present, there are no more brands involved in retail, and our advantages in the testing and after-sales service of other brands are not obvious. Considering that our own brand still has room for improvement, at this stage, we must invest limited energy in the brands we are good at, and first make the brands we are good at bigger and stronger, which is the development goal of United Used Cars at this stage.
SG-Auto: What is the biggest difference between United's used car business now and the past?
Hou Yaxia: The biggest difference is the ability to survive independently. The early second-hand car business was based on the storefront, relying on the store replacement and manufacturer policy to form the initial team, after the business volume became larger, especially after the beginning of retailing, you can not only rely on the storefront. This was especially evident in the second half of the year, as we increased our outpacing, which was a test for the team. In addition, we will also put forward new requirements for ourselves every year, that is, to continuously reduce the proportion of stores to receive cars, and in the future, we can survive independently without relying on storefront and manufacturer policies.
SG-Auto: What is the overall gross margin of the used car business at present?
Hou Yaxia: The gross profit margin is about 5%. We have increased the amount of out-of-the-box production and raised the price of bicycles. Most of the vehicles replaced by the storefront are 50,000 or 60,000, but the overall price of vehicles mined from outside is 100,000 to 150,000.
SG-Auto: How quickly is the used car retail business cash flowing?
Hou Yaxia: The funds for retail vehicles are about 30 days, and the wholesale vehicles are about 10 to 12 days.
SG-Auto: How does United Define the Age of Used Cars?
Hou Yaxia: At present, we define vehicles over 45 days as long-term vehicles, and after 45 days, the finance will collect late fees from the procurement funds. Our assessment of this is very strict, the number of kilometers is too large long-term storage age vehicles, we will adjust to the wholesale mode of sale.
In addition, we basically do not less than twice a week, making centralized price adjustments for some vehicles. Our retail sales are basically a fixed price, but if a car has not been sold for 20 days, I may directly reduce the price, rather than reduce the profit demand rather than let it occupy the capital for a long time.
SG-Auto: From an operational point of view, what are the differences between used car retail independent showrooms and stores?
Hou Yaxia: The retail showroom creates the image of a brand, and the showroom must cooperate with the store to do the replacement business, and also slowly cultivate the customer source with the help of the passenger flow of the new car. Hypermarkets are tests how to combine the advantages of United used cars with the advantages of United's four brands, and pass these advantages through hypermarkets.
SG-Auto: Is the source of used car retail customers mainly natural arrivals?
Hou Yaxia: Now there is basically no need to open a store customers continue to come, we now offline natural arrival of the store traffic is not large, and online customers have accounted for 60% of the overall customer volume, there is a part from employees or old customers referrals, relying on natural customer flow alone can not support the retail business.
SG-Auto: What are the advantages of United Group in retailing used cars?
Hou Yaxia: First of all, its own advantages, the initial stage of the group's used car business is still very good, because the manufacturer has replacement subsidies, so even if it is wholesale, each car has a relatively considerable profit.
The second is that not only will we certify retail vehicles, manufacturers will also provide brand certification for retail high-quality vehicle sources, from vehicle preparation to sales, from material files to price tags, manufacturers have guiding documents to standardize the process. In addition, our appraisers are certified by the manufacturer, and the sales consultants are also trained in the manufacturer's product process. Manufacturers will also do operation evaluation every quarter, for various processes such as replacement, sales, and cross-video of customers, etc., they must check whether they are compliant according to the manufacturer's standard documents.
The third is that Hezhong Automobile has been established for 16 years, and now there are 24 4S stores, and hundreds of thousands of customers have allowed the United Automobile brand to establish a good reputation and reputation in the Henan market, which is equivalent to endorsing the retail of second-hand cars.
SG-Auto: How can retail vehicles be transparent?
Hou Yaxia: For all our retail vehicles, there will be an appraiser to do the first test, then the inspector to do the re-inspection, and then there is a test supervisor to do a spot check, a total of three passes. Retail vehicles also added a 90-day commitment to buy back services from third-party used car testing agencies 268V. When the inspector records the report, the maintenance and maintenance records of the vehicle, including the insurance records, must be queried and uploaded, and the information must be publicized to the customer.
SG-Auto: Does certification by manufacturers increase the cost of retail vehicles?
Hou Yaxia: It will be improved, including the 90-day buyback of the problem vehicle now, which is to be paid, which will increase the cost, but this cost will not be directly added to the car price for customers to pay. We are building our brand with increased costs.
The value of digitalization of used car business
There is no doubt that used car retail is an important development direction for dealer groups in the future. The sales scale of the dealer group today is due to the establishment of the new car business management system by the main engine factory. However, if you want to scale the second-hand car business and make the second-hand car bigger and stronger, you also need to build a replicable and manageable second-hand car business system.
In the past, the second-hand car business management system of 4S dealers lagged behind the new car management system, there was a situation where business data was lost, inventory could not be shared, departments were independent, and there was a lack of effective control supporting systems and tools, resulting in serious loss of vehicle sources and high operating costs.
Digitalizing your business is an effective way to address these issues. The greatest value of digitalization is the improvement of organizational ergonomics and the improvement of business security. In 2019, Hezhong cooperated with Cheyipai to start experimenting with the digital operation of the second-hand car business, realizing the comprehensive digitization of the input, sales, storage and management of the second-hand car business, and the inventory turnover rate of the second-hand car was greatly improved, and the timeliness of the information was stronger, so as to have the ability to carry a larger business volume.
SG-Auto: What are the applications and roles of digital systems in the Group's retail sales of used cars?
Hou Yaxia: I think the digitization of used cars is more prominent than that of new cars, and the used car business relies on the super 4S used car system of Cheyipai, which has formed a standardized system from customer entry to store card building, testing and evaluation, inventory management to sales management. I can remotely do the purchase price approval on the system, and after the approval, the operation center personnel can directly re-inspect and then shoot.
Retail vehicles can be accessed to the inventory system through retail shelves, and the pictures and reports of the vehicles are clear at a glance. Now the management business can clearly understand the receipt, sale and inventory of more than 20 4S stores in The management business can clearly understand the receipt, sale and inventory of more than 20 4S stores in The system can more reasonably control risks.
Through the Super 4S used car system, we have many upgrades in customer lead management and follow-up, business progress follow-up, business risk control and vehicle inventory management, which have helped our used car business efficiency and execution effect have been significantly improved.
We can now follow up on the implementation of the new car team in the used car opening and business introduction through the system to follow up on the number of customers in each 4S store and the number of customers who recommend used car evaluations. New car sales can also understand the follow-up situation and market price information of customers' second-hand cars through the system, help the new and old car teams to communicate information faster, and can effectively negotiate with customers.
Super 4S realizes the sharing of all vehicle inventory within our group, we can break through the limitations of space, so that every used car sales consultant can sell vehicles across the group, maximizing the customer conversion efficiency of sales staff.
SG-Auto: How long has the used car business been digitally operating, and what is the biggest change from the past?
Hou Yaxia: It's been almost three years, and the biggest change is that the work efficiency is higher, and the business volume is doubling year by year without doubling the number of personnel. The second is the wholesale vehicle replacement of the storefront, and the person in charge of the auction department has been the normal work of sending auction cars through the system, and I can basically not worry about it now.
SG-Auto: Can I avoid flying orders with a digital management system?
Hou Yaxia: The digital system not only avoids flying orders and uses the auction platform, but also avoids some non-compliant behavior of salespeople.
Now all the vehicles acquired by our stores must be completed through the system, and without system-related screenshots and information, I do not recognize the received cars. After the sales consultant enters the clue, the appraiser does the test to send the auction, and if the vehicle is not completed, all the defeat return visits are also completed through the system.
In addition, all the vehicles in the 4S store that reported the replacement subsidy through the manufacturer's replacement system in the same month, I will check back through customer service to see if there is any vehicle information in the system, if not, their relevant personnel need to start from the clue to investigate which link is the problem. Through the control of process data and the use of systems, business people will no longer do non-compliant things.
Live broadcast: a new outlet for used cars, a new attempt by The United
Not long ago, The Car Emperor released the "2021 Auto Live Broadcast Data Report", which pointed out that live broadcasting has become a high-frequency just-needed way for participants and users in the upstream and downstream of the car to interact. The report data shows that the per capita number of second-hand car live broadcasts has increased by 61.8% in the past five months, the length of watching broadcasts has increased by 23.6%, the number of interactions has increased by 26.3%, and the user's willingness to interact is also quite strong. Through live broadcasting, users have a more comprehensive understanding of the condition, price and source of used cars.
As an effective tool to create private domain traffic at this stage, United Group naturally cannot miss the dividends brought by live broadcasting. According to reports, the used car team of United Group has been trying Douyin video and live broadcast operations since November 2019. After two years of exploration and persistence, today, United Group used cars have a dedicated new media team, and business operations are becoming more and more professional and refined.
In Hou Yaxia's view, based on the business demands of second-hand cars, the team must study new media, which will transfer some of the customers' consumption habits and consumption methods to online, if not paid attention to, this part of the customers will be lost. For such a new thing as live broadcasting, the dealer group must study it and let it be monetized, so as to bring new performance.
SG-Auto: Is The Live Streaming of United Used Cars just an attempt or is there a clear goal?
Hou Yaxia: Live broadcasting was initially forced to do it, because offline customer volume is shrinking, but sales still need to increase, so live broadcasting is used as a new customer acquisition channel. After insisting on it for a while, we found that the live broadcast was indeed effective, and later selected a full-time anchor and set up a new media team, and the number of clues and the volume of transactions have been significantly improved.
SG-Auto: Is there a lot of investment in live streaming?
Hou Yaxia: We are actually more people's input in live broadcasting, such as forming a special team. Depending on the leads obtained, we will give the anchor a live broadcast subsidy, and then the lead will be followed by a sales consultant.
SG-Auto: Which platform is the main platform for live broadcasting?
Hou Yaxia: Mainly use vibrato. Now four exhibition halls and a hypermarket, each store has its own account, according to the situation in their own store to do live broadcasts, not less than two times a day, each session is not less than two hours, this is our regulations, the specific live broadcast time in the store free to grasp.
SG-Auto: Do digital systems also use in live streams?
Hou Yaxia: Yes, using the big windmill system, you can hang a small red car when you live, which is equivalent to the link of the car source, and after clicking in, you can see the introduction of the car source.
Through the super 4S micro-store system, we can obtain the behavior data of each customer for the browsing and inquiry of the united vehicle, which can not only help us quickly understand the car purchase preferences of each customer, so that the second-hand car sales consultant can recommend the vehicle more targetedly, but also guide our inventory adjustment, we can adjust the inventory quantity, vehicle price and promotional activities according to the browsing popularity of each vehicle, and further reduce the risk of operation.
SG-Auto: What is the current percentage of customers received by live streaming channels and other channels?
Hou Yaxia: At present, the proportion of online customers is about 60%, of which 20% comes from live broadcasting, and the rest comes from platforms such as Autohome, EasyCar, 58, and Xiaohongshu.
SG-Auto: How do you see the group's future used car business model?
Hou Yaxia: The quality of retail used cars is constantly improving, so the future model of used cars may go to the showroom of new cars, that is, it does not distinguish between new car sales and used car sales, everyone sells these cars together, so that used car customers can also get the same service as new cars. However, the professionalism of new cars and used cars is not the same, and it is still difficult to achieve in the short term. So we're currently doing what we're good at in our respective fields.