In the electric vehicle industry, various sales models are emerging in an endless stream, some people do not take the usual path, and some people follow the trend.
In 1999, GUANGQI Honda opened its first domestic 4S store in Guangzhou, and the secretary of the Guangzhou Municipal Party Committee and the president of Honda attended the ceremony to celebrate. 20 years later, a Mercedes-Benz female owner sat on the car cover, making 4S stores across the country sincerely afraid. Today, electric cars seem to have abandoned 4S stores and mushroomed on the first floor of shopping malls, doing everything in their power to compete for gold bunks.
A widely circulated story is that The ideal beat a tide brand into a storefront with five times the rent, "only because this location is near an internet celebrity milk tea shop[2]. ”
China's new forces are getting more and more involved in order to grab the territory, but Tesla, the originator of the direct operation model, has retreated, and there is news that they plan to build a direct-operated 4S system of "front shop and back factory" on the outskirts of the city, which has triggered a hot discussion of "driving backwards".
Many retail giants also want to come in and get a piece of the pie, including Gome and Suning, two sworn enemies. As China's largest commercial real estate group, Wanda naturally does not look at the wall, and in November last year, it established "Wanda Automotive Technology Service Co., Ltd." and recruited Li Hongpeng, who has served as an executive in Mercedes-Benz, Ford and Hyundai, as president.
Electric vehicles have used shopping malls as a new propaganda position
Around channel change, this article attempts to answer three key questions:
1. Why have most eviction brands abandoned the 4S model?
2. What are the differences in the direct sales model and effect of different brands?
3. Why is Tesla re-embracing the 4S model?
When 4S stores started in China, the domestic market prices were chaotic, the quality of spare parts was uneven, and this four-in-one model of "vehicle, parts, after-sales and market research (Sales, Sparepart, Service, Survey)" could solve these pain points.
Today's 4S model is mainly reflected in four aspects: customer relationship, price system, profit structure and customer acquisition costs.
In the 4S model, OEMs are only wholesalers, do not deal directly with consumers, and are not responsible for follow-up transactions, maintenance and other links. This model allows automakers to quickly seize the market at a lower cost, but it also brings an incurable side effect: price disorders.
Generally speaking, automakers will announce the official suggested retail price (MSRP) of the product, but there is no mandatory, dealers can flexibly formulate strategies according to market conditions, hot products price increases, and price reductions for unpopular products have long been commonplace.
Since 2014, the growth rate of the domestic automobile market has dropped to single digits, and the automakers have transferred the inventory to the dealers in order to rush the volume, who in order to ensure capital turnover and get the rebates of the automakers, selling the car at a price lower than the purchase price, resulting in the strange phenomenon of price inversion in the terminal market.
In 2015, the proportion of dealers in China that can achieve profitability is only 22%, 48% are on the verge of profit and loss, 30% loss, and this strange phenomenon is becoming more and more intense, by 2019, 80% of dealers new car prices are upside down, 40% are in a state of loss, "new cars sell a loss, the more you sell the more you lose" has become an industry nightmare.
In order to make up for the loss of new cars, dealers can only seek profits from other businesses.
In 2016, the new car business contributed about 50% of the profits to dealers, but since then, the structure has reversed, and in 2019, the new car business can only contribute 3.4% of the profit, far lower than the 58.2% of the after-sales business and the 21.2% of the financial and insurance business[3].
Compared with new car transactions, the charging model of after-sales and financial business is more opaque, and consumers are more dissatisfied with 4S stores, which are also jokingly called "four sons stores". The dissatisfaction of the female owner of Mercedes-Benz is mainly due to a financial service fee of unknown origin. In 2020, the Beijing News reporter found through secret visits that Volkswagen and Nissan dealers would deliberately damage good parts to generate income [4].
However, this wool is out of the profit structure of pigs, but electric vehicles can not provide. Compared with fuel vehicles, the mechanical structure of electric vehicles is much simpler, and the maintenance expenditure is not high, so it is unrealistic for dealers to make money on electric vehicles through after-sales business.
Rising price-tip costs are also driving electric cars downtown.
Since the beginning of the PC era, 4S stores, because they are far from customers, will generally buy "sales leads" from platforms such as Autohome, Easy Car, and Understand Car Emperor to facilitate transactions, but after 2018, although the car market is growing negatively, the clues are constantly increasing in price, and in 2019, many dealers and car companies suspended cooperation with each other because of the 20% increase in autohome membership fees.
For electric cars, instead of paying a share of the money in the suburbs, it is better to save the money and show your face in the city center.
In the traditional distribution model, the opaque price system, the extreme dependence on the after-sales profit structure, and the rising lead cost cannot meet the needs of electric vehicle brands.
Through supermarkets, the sales model of electric vehicles has changed from "consumers come to me" to "I go to consumers". "Thousand stores and thousands of prices" will become "national unified price".
Behind this change, car companies need to pay a high cost.
The grab of the supermarket is first of all a war of attrition of funds, only the head brand can afford to play, and the operating model between different brands is also different.
Weilai is characterized by a first-class business district + high-end club. The biggest advantage of this model is the high user activity and brand stickiness - the baristas in NIOHouse are also NIO employees. But the disadvantages are that rents are expensive, costly, slow to expand, and limited coverage. So there was a proxy NIOSpace. In the past four years, WEILAI has opened less than 40 NIOHouses, and NIOSpace, which has smaller space, lower cost and deeper channels, has opened more than 320.
The ideal is to emulate Tesla: the offline space is not large, and the functional form is relatively single. The biggest advantage of this model is that the cost is controllable, which is reflected in the financial report is the lowest sales management expense in "Wei Xiaoli", which accumulated only 2.25 billion yuan in the first three quarters of last year, accounting for 13.7% of revenue.
The most special Xiaopeng chose direct operation + agent. The biggest advantage of two-legged parallel is that it can quickly expand sales channels with the help of the resources of traditional dealer groups, but the challenge lies in the requirements for price and service consistency, such as the zero-run car that adopts the same model as Xiaopeng and has been exposed to negative news such as "bundled sales".
By the end of November last year, Xiaopeng's retail stores had reached 311, the largest among the new forces, but the sales management expenses also reached 3.29 billion yuan, accounting for 26.4% of revenue. In contrast, Weilai spent 4.14 billion yuan on sales management in the first three quarters of last year, but the revenue accounted for only 15.8%.
Compared with 4S stores, supermarkets are naturally an excellent advertising space because of their customer flow advantages, and it is also a shortcut for new brands to gain popularity. But this model is extremely expensive. In The case of Changyaotian Street in Beijing, the average rental price of a booth on the first floor of the mall is as high as 1,500 yuan per square meter per month, and a 200 square meter shop needs 3.6 million yuan a year[11].
For the new forces, the significance of the supermarket is "drainage + transaction + advertising", but with the increase in models and sales, the carrying capacity of the supermarket will be stretched, and the car is not a luxury, there is no huge profit, nor is it a high-frequency consumer goods like cosmetics, these factors are doomed to the supermarket store will not become the only sales form of electric vehicles.
But what is certain is that direct operation is the trend of the times.
Compared with the new forces, traditional automakers are not so easy to lightly load, these car companies have already formed a community of interests with dealers in the process of development, and dealers have also accumulated the qualifications to be able to call off automakers.
In 2017, Audi planned to establish a joint venture with SAIC, but it was boycotted by FAW Audi dealers, which caused Audi's sales in China to plummet by 25% in the first quarter of that year, and Audi had to make significant concessions on the contract, and finally compensated FAW dealers for nearly 4 billion euros before reaching a settlement.
For traditional car companies, the development of electric vehicles can only choose a compromise mode.
For example, when Volkswagen promoted the pure electricity family I.D series in China, it chose an agency model between direct operation and distribution. In this model, the product price strategy is uniformly formulated by the automaker, and the dealer becomes an agent, only responsible for providing display, invitation, test drive, delivery and after-sales service, etc., and the profit is no longer the difference between the purchase and sales, but the commission.
Volkswagen pure electric family I.D series
The essence of the agency system is that the whole vehicle has taken back the pricing power from the dealer.
For traditional car companies, the agency system is a seemingly multi-win-win solution, dealers save inventory, greatly reducing financial pressure; automakers ensure that prices are open and transparent, avoid vicious competition between dealers, but also revitalize network resources; consumers do not have to dig out to bargain.
Yu Jingmin, general manager of SAIC Volkswagen Sales Company, once said: "In the agency marketing model, when SAIC Volkswagen issues invoices, no one can move the price, and there is no possibility of negotiation at the terminal. More than half of the energy and time of the current 4S stores are spent on 'can it be cheaper', which is a war of attrition and has no meaning [5]. ”
However, this seemingly perfect solution has encountered many problems in reality.
Originally, Volkswagen initially only allowed dealers above level 5 to act as agents of the ID family, and level 7 could open the city showroom, but before August last year, the ID family's sales in China were relatively dismal, with a cumulative sales volume of less than 10,000 vehicles per month, after which Volkswagen delegated the agency to thousands of dealers, and the sales volume increased to more than 10,000 vehicles, which is equivalent to less than ten ID series that each dealer can sell every month.
In addition, this model of official unified pricing has also been loosened. In October last year, a Volkswagen dealer in Shanghai was deeply dissatisfied with the old car owners because of the private price reduction of 20,000-30,000 yuan for ID family products, and finally the automaker deducted all the commissions of the month and gave a yellow card warning.
However, this phenomenon of terminal discounts has not disappeared, "Aika Auto" recently visited and found that the ID family still has a discount of 10,000-30,000 yuan in the terminal [6], and even some media broke out that "FAW-Volkswagen will now issue sales invoices to dealers, and then the latter will issue them to consumers", which also means that the direct-operated agency model that was once tailored for pure electric products has been seriously distorted.
For traditional automakers, how to balance the interests of dealers and consumer experience, pricing strategy and sales targets is a big challenge, and it is also the only way to go directly, but if you return to the 4S volume model because of short-term setbacks, it may not be wise.
So, how to understand Tesla's 4S model?
In fact, in the matter of direct operation, Tesla is undoubtedly the most committed to the original intention.
In most states in the United States, car companies are not allowed to sell directly, but Musk feels that electric vehicles and the traditional dealer model are incompatible, so he chooses a state to fight a lawsuit, do not engage in direct sales, and do not give up in China.
In July last year, Pinduoduo launched a Tesla promotion, the price is 20,000 yuan cheaper than the official website, but Tesla refused to deliver the Model 3 to the group buyer, and cancelled his order, and then made it clear that it would either re-place the order on the official website or sue Tesla, with a very tough attitude.
However, it is such a non-directly operated car company, last year it was revealed that it was going to return to the 4S model, the practice is to reduce the direct commercial supermarket experience stores in first- and second-tier cities, while negotiating with traditional 4S store investors, establishing a "front shop and back factory" model, providing one-stop services from test drives, transactions to after-sales maintenance.
At first glance, it sounds like Tesla is driving backwards, but it's not.
In 2008, Tesla revolutionized the traditional 4S model into three, the experience store is responsible for reception and test drive, the service center is responsible for delivery and after-sales, and the official website and APP are responsible for placing orders, all three of which perform their duties, completely solving the problem of price opacity and vicious competition between dealers.
But now, Tesla wants to "turn zero into a whole", integrate pre-sales and after-sales modules, and establish a set of direct 4S models, which is equivalent to further improving on the basis of the past.
The reasons for this are nothing more than threefold: price/performance, customer satisfaction and after-sales profits.
Before localization in 2020, Tesla mainly expanded its influence by building stores in the core business districts of first- and second-tier cities, and last year Tesla's Shanghai factory sales reached 480,000 vehicles, basically completing the historical mission of user education.
Tesla's service center
And with the continuous improvement of ownership, consumer service demand will also increase, the historical mission from the past "pull new" to "pull new + retention", compared to the supermarket store, the area is larger, the service process is more perfect 4S store is obviously a more suitable space carrier, and from 2019, there are basically 10 4S stores in China every day, for Tesla, this is a good time to read the bottom.
In addition, Tesla can also take the after-sales profits into its own hands through this "front store and back factory" model. In November 2020, Tesla opened its first direct-operated sheet metal spray center in Shanghai, which has now exceeded 10, which means that Tesla is gradually withdrawing its after-sales authority and improving customer satisfaction in this way.
It should be pointed out here that Tesla's embrace of the 4S model is not the same as abandoning supermarkets. There is no substitute relationship between the two, in the third- and fourth-tier cities where the ownership and penetration rate of electric vehicles are insufficient, supermarkets are still the most effective means of gathering customers, and authorized sheet metal spray centers are still the most cost-effective form of service.
Some people may ask, as the leading big brother of electric vehicles, will Tesla's 4S play be copied?
Should not, you know, any sales model is ultimately a product, Tesla at this time to choose the 4S model is based on enough ownership, popularity and competitiveness, not all brands have such appeal.
For electric vehicle brands, which sales model to choose is the result of a balance between cost and benefit, short-term goals and long-term strategy, and it will change with the development of the market and the enterprise, and no model will be universal.
In the future, the competition of car companies for the prime location of the business circle will not stop, and the discussion on channel change will not stop, but two points are certain.
First, no matter which model, the competitiveness of the product is the first. The product reputation is general, the online traffic is general, and the offline sales will only be more general.
For example, SAIC's Feifan Automobile (formerly R brand) has opened more than 180 experience centers across the country for more than a year, and invited Jay Chou's contemporary spokesman, but the monthly sales volume is only more than 2,000.
Second, no matter what the offline effect of these brands is, the real estate company that collects rent on schedule is definitely stable and profitable.
[1] Outside of selling cars, see Weilai, the heart of the car
[2] Selling one car is equivalent to selling 15,600 cups of Starbucks, and the newly built car has become the "fragrant food" of the business circle, the future car Daily
[3] 2019 National Automobile Dealer Survival Survey Report
[4] Secretly visited two 4S stores: smashing good parts to determine the damage and then repairing the intercepted oil to recover and sell, Beijing News
[5] How the SAIC Volkswagen ID.4X sold, Auto Business Review
[6] Volkswagen hits a wall, Tesla retreats: is direct operation of the car not the optimal solution? Automotive Sankei
[7] Volkswagen ID. Tandian: The discount is comparable to a fuel car, the price is negotiable, and the car is a car
[8] FAW-Volkswagen ID. agents increased to 737, Xinmin Evening News
[10] Tesla: It's time to switch to 4S direct stores, China Automotive News
[11] Shopping malls selling cars: a new battlefield for car companies, electric vehicle observers
[12] The Future of Auto Sales in China, Accenture
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