This article is based on publicly available materials and is for informational purposes only and does not constitute any investment advice.
Over the past 100 years, the automotive industry has emerged as the world's largest industrial sector. Today, China's auto industry is leading the global industry, from the era of internal combustion engine to the era of new energy, is ushering in a century-old level of a new wave of the main wave.
Under the new wave, the vast majority of investors in the market, although they have expectations for the industrial changes in the next 10 or even 30 years, still greatly underestimate its value expectations:
1. This is a reconstruction of the world's largest industrial sector, and the R&D investment and new form of product release brought about by the integration of soft and hard innovation will become the largest commercial increment in the global economy.
2, 2021 Chinese average GDP of about 12,000 US dollars, if China's independent new energy brands to achieve a sales breakthrough of 2 million vehicles, basically means that China has stepped out of the middle-income trap, per capita GDP of 20,000 US dollars is just around the corner.
"If you want to go to the top floor, you are upside down on the elevator, hit the wall, do push-ups, all of which are not important, the important thing is that you have to be on the elevator", it just so happens that the iconic symbols of Ningde Times, Baidu, Huawei, Tesla, and Autohome, which are at the top of different positions in the new energy vehicle industry chain, are on top of this high-speed upward elevator.
Figure: Autohome, Source: Network
How will they win new historical opportunities? For software and hardware players, such as the Ningde era and "Wei Xiaoli", we have fully covered. This article will focus on Autohome (HK:02518; NYSE:ATHM) – revealing the historical opportunities and changes in China's automotive information service industry from the dimensions of new cycles, comparative advantages and competitive deductions.
01
A century of change
[1] The century-old changes in the automobile industry
At the end of the 19th century, the German engineer Carl Benz manufactured the first modern car, the first half of the 20th century, through the industrial system quickly entered the homes of ordinary people, the second half of the 20th century oil crisis and environmental problems turned the automobile industry to a small displacement, high-efficiency fine production control era, the integration of global resources to give birth to Volkswagen, Toyota, General Motors and other multinational automobile groups.
In the first half of the 21st century, such as the automotive industry is at the intersection of epoch-making multi-technological changes (energy, transportation, communications, computers, etc.), the result is that the concept and definition of automobiles have undergone a fundamental change, and new and old car companies will enter the era of competition, which is bound to bring huge impact and changes to the global automotive industry in terms of structure and development direction again.
Figure: Automotive Industry Transformation, Source: Network
To this end, new and old car companies and OEMs are "plotting changes":
"Super species" Tesla detonated the tram market, intelligent, automated, software-based, network direct sales and other new experiences to pry open the minds of consumers;
Traditional car companies have formulated a comprehensive electrification timetable, and most trams bypass the traditional distribution network and adopt a direct sales new retail model;
Including Mercedes-Benz, BMW, Volkswagen, AS WELL AS SAIC, Changan, Great Wall and other domestic and foreign car companies have deployed digital transformation strategies;
China's new energy vehicle market has achieved a single-month penetration rate of nearly 30%, and the overall new energy vehicle market penetration rate has entered a rapid development stage of 10%-20%.
It can be seen that dataization and intelligence are "potential", iterative automobile industry and enterprises are "can"; the transformation of the economic and social development stage is "potential", and the upgrading of new industrial supply is "energy". In general, the automotive industry will face the following four changes:
1) Goals, from improving the driving experience to autonomous driving;
2) Path, the competition of OEMs evolves from labor and supply chain cost optimization to soft and hard integration;
3) Assets, chassis/engine technology and brand to give way to data and service networks;
4) Interaction, the car is no longer just a means of transportation, but a new living and commercial space.
[2] The historical opportunity of the automotive vertical information service platform
The future car is no longer a mechanical tool for travel, it will be used as a carrier of travel and mobility services; the identity positioning of car companies is no longer limited to the industrial manufacturing sector, it will be involved in the software, Internet field and information service sector, and become a participant or provider of digital aggregation travel service platform.
Around this era of changes, the participants of each node of the entire automotive industry chain need to undergo changes in the new cycle.
Among them, the traditional automotive vertical media can no longer meet the needs of the new cycle of business forms, and the business model that was previously limited to information distribution (car company advertising, distribution leads, etc.) has been in a downward channel:
On the one hand, because consumers generally have an increased understanding of the tonality and product performance of automobile brands, it is difficult for the consulting and diversion business to make breakthroughs through heavy investment;
On the other hand, after the platform distributes traffic, the user's digital operation link will enter the final stage, which is contrary to the digital service characteristics of the new cycle, whether it is for car companies, dealers, or vertical media platforms, the value of user data will be greatly reduced;
Figure: Inflection point, Source: Network
Similar to the mobile phone from the era of functional machines into the era of smart phones, companies with the ecological development of the service industry have obtained extremely broad soil for development - the density of industrial information has increased exponentially, corresponding to the exponential growth of service provider value, such as Apple, Google, WeChat, Alipay and other digital ecological suppliers and product providers.
Vertical media that have entered the era of electric vehicles from the era of fuel vehicles are not only vertical, but also become mainstream commercial life platforms with the expansion of "car space".
In order to measure today's 3 mainstream automobile vertical information service platforms in China (Autohome, Easy Car, and Car Emperor), the biggest difference between them is not in the depth of specialization and verticalization, but in the horizontal commercial breadth of the "car space" after entering the new cycle, which will be the largest potential energy variable after the vertical platform has stepped from "functional machine" to "smart machine".
In this context, through comparative research, we believe that as one of the iconic symbols of China's automobile industry, the potential energy value of the new cycle is far from being fully recognized by the market - from the perspective of competition, it can be seen that the autohome has used the comparative advantage resources to build a series of key success factors of "no one has me", which has raised the competition standard of the new automobile cycle to a new level, and is expected to use the automobile comprehensive service ecology to form a dimensionality reduction attack on traditional players.
02
Comparative advantage
The revolution has arrived, the field of automotive information services is undergoing profound changes, and industry standards are being reshaped by the practices of participants.
Specific to the 3 automotive vertical platforms:
Understand the car emperor back to ByteDance, still take the "traffic + advertising" traditional model;
With the support of Tencent, coupled with the financial leasing services of Yixin Group, e-car can extend the information matching model to some financial service areas, that is, "traffic + advertising + credit", but the overall situation is still limited to the behavior cycle of car selection and car purchase;
Compared with the combination model of the first two with "traffic + marketing" as the core, the combination of Autohome and Ping An Group not only has the service capability of horizontally running through the value chain of the automotive industry, but also uses big data capabilities + VR and AI technology to connect the whole process system of automobile research and development, marketing, channels, services and quality with digital products;
At the same time, based on the accurate user base, financial products and offline service capabilities of Ping An Car's ecology, we will dig deep into the commercial potential of each node vertically, build an ecological matrix covering the whole life cycle of automobile production, sales and service, and be a one-stop solution provider for the new cycle of the automobile industry.
Picture: Autohome & Ping An Good Car, Source: Network
In terms of the degree of integration with industry trends, the combination of "Autohome + Ping An Group" is more likely to obtain the favor of the new cycle:
Unlike Players Tencent and ByteDance, who are well versed in traffic "art", Ping An Group's advantage lies in its "Tao" of better understanding of cars, which stems from its full range of financial product lines, huge offline network teams, high-value customer groups, aggregating diversified car service providers, and Ping An's accumulated financial data and financial technology strength, such as:
Offline resources: Ping An Life insurance has more than 3,300 service outlets with 700,000 agents; Ping An Property & Casualty has 10,000 auto insurance commissioners offline; Ping An Bank has 1,200 business institutions nationwide;
Customer resources: covering 630 million Internet users, 220 million high-net-worth financial customers, with a huge high-value customer base and car owners;
Service provider resources: Ping An's perennial property and casualty insurance operations have accumulated across the "open-raise-play" aftermarket suppliers, including 113,000 cooperative refueling stations, 400,000 parking service points, 868,000 charging piles, 470,000 car maintenance and repair cooperative outlets, and 30,000 modified car stores;
Data/technical strength: The third largest number of artificial intelligence patent applications in the world, intelligent voice technology is prominent, widely used in multiple industries and supports multi-local dialects.
From the perspective of comparative advantage, although in terms of traffic operation, "Autohome + Ping An" has no obvious advantages over "Easy Car + Tencent" and "Understand Car Emperor + Byte", the weight of traffic to the "auto integrated service ecology" in the new cycle is very limited, and the know-how around the car service ecology is the focus, and the collaborative ecology of "Autohome + China Ping An + industry participants" (consumers, dealers, OEMs) undertakes the opportunities under the new cycle, and it is a dimensionality reduction blow in the face of uncivilized competitors in the business model.
[1] Full-link service closed-loop
The most frequent use cycle of general users in the car vertical platform is the early stage of car purchase (3 months to 1 year), after the purchase of the car, the user's stickiness to the vertical platform will drop significantly, in the context of the dual environment of the top of the car market and the top of the traffic, "user retention + diversified realization" is the key to the long-term test of the 3 mainstream car vertical platforms.
Compared with easy cars and understanding car emperors, Autohome can unite with ping an good car owners to achieve complementary advantages by integrating the former to see the car, buy a car and the latter to use the car, and create a service solution that covers the whole life cycle of the car by "seeing, buying, using, maintaining, and changing".
The first is accurate traffic, once the home and good car owner account accounts are opened, the former high-frequency traffic (46.9 million in December 2021 Autohome DAU) drives the latter low frequency, users penetrate from the original car purchase behavior to domestic car behavior, the linkage coverage of the two platforms and services more people with car buying and car needs, forming a strong potential consumer traffic pool.
The second is user stickiness, relying on the car service provider resources accumulated by Ping An for more than ten years, after opening up, the platform will aggregate diversified services to the equity middle platform, provide users with unified standards, unified pricing, unified experience of service products, form a unique competitiveness in the market, and enhance user stickiness.
The last is diversified monetization, naturally, if the user from buying a car to using a car is on a service platform, then the user's car replacement and car selling behavior will also be gathered on the platform, which has developed the ability to expand the second-hand car business of the platform.
The "Home + Ping An" car ecological model has three core competitiveness in the second-hand car business:
The first is the traffic advantage, in addition to the above-mentioned Autohome and good car owners, Autohome has also acquired the country's largest second-hand car auction platform - Daily Auction Car, which already has the transaction disposal ability that other vertical media do not have, and the platform brings together 60,000 car dealers and 10 million potential car users;
The second is the "standard", the owner of the car to buy, the car is retained in the platform, including the real transaction price of the vehicle, car insurance information, maintenance and repair information, etc., to a large extent to solve the pain points of the car condition is difficult to standardize the data, so as to establish the industry standard for the detection and valuation of second-hand cars; and finally" is "finance", through the introduction of Ping An Group's internal financial products (liability insurance / car insurance / installment loans, etc.), Autohome has established a second-hand car credit reporting system to achieve full-link ecological coverage of second-hand car transactions.
In this way, the platform users from "looking at the car - buying a car - using a car - selling a car" to the vehicle's "factory - on the road - scrapping" and other such and vehicle information full cycle coverage, forming a flywheel effect of people and vehicles. Compared with the traffic operation of friendly businessmen, "Home + Ping An" plays the cross-platform resource advantage of "no one has me" to build the only full-link automobile ecosystem in the whole network, and its scale will only grow larger and larger.
[2] Automobile new retail
The rapid penetration of the new energy vehicle market is not only an impact on car products, but also a transformative impact on the traditional distribution network.
Picture: Tesla directly operated stores, source: network
Taking the success of Tesla's direct sales model as an example, new energy vehicle companies are gradually transforming into an all-online direct sales model. For traditional car companies, after the long-developed distribution network enters the car market stock stage, it is difficult to meet the optimal utility of dynamic operations such as "scheduling- procurement- production - production - inventory - distribution" of manufacturers. In addition, the continuous decline in the price of superimposed cars and the rising sales costs have put car companies and dealers under pressure.
In the traditional distribution model, dealers stay more in the "clue era" based on the purchase of clues from vertical media and offline stores, one is that the traffic competition intensifies to make the cost of obtaining clues higher, and the second is that the customer reach is relatively single, and the churn rate of lead customers is higher, which eventually leads to the lower and lower cost performance of clues.
On the whole, the market lacks high-quality traffic supply for dealer channels, which has plagued the auto vertical platforms including Autohome, Easy Car, and Zhichedi. However, "Home + Ping An" has the ability to provide dealers with new retail supply capabilities, and the core advantage is still that Ping An Group has a huge number of high-net-worth people and car owner resources, as well as offline station networks and offline traffic throughout the country.
Further, first, "Home + Ping An" can slow down the traffic costs of dealers with the help of Ping An's low-cost offline traffic; second, Ping An customers have high data value, the accuracy and conversion efficiency of traffic are higher than online traffic, and user maintenance can be repeatedly reached and tracked through Ping An's online channels; third, at this stage, new energy vehicle purchase users are mostly for additional purchases and exchanges, and at the end of the decision-making path, they will pay more attention to the package of services after purchasing a car. In this regard, Ping An has the ability to provide vehicle life cycle services.
In this way, Ping An will flow its own offline traffic into the Autohome platform, which coordinates the new digital supply service for dealers.
Autohome announced a new upgrade to its dealer products (Auto Dealer Hui) in 2022, including the "Smart Showroom" upgrade online with viewing service to expand dealer customer acquisition scenarios, and the "Smart Online Sales" upgrade to continuously improve the lead conversion rate. At the same time, it also jumped out of the "clue" business and launched a new digital product "Sinan", entering a new era of empowering dealers to improve their business capabilities.
The "smart showroom" breaks through the time and space limitations of the offline showroom, opens up real-time communication channels between merchants and users, and through "VR belt viewing" - real-time voice + same-screen interconnection + step-by-step shopping, so that users can fully and intuitively enjoy professional services such as shopping stores and car chats online without leaving home, so as to obtain more high-intention potential customers and accelerate user car purchase decisions.
The new launch of "Sinan" empowers dealers to formulate business plans through four insight capabilities to "reasonable" and "have numbers" and improve business results:
Insight into business opportunities in the large market, grasp the dynamics of business opportunities such as new cars, after-sales services, and second-hand cars in real time, and help formulate better store-side business plans;
New car pricing insights, timely grasp of massive terminal prices, help timely and reasonable formulation of new car pricing, improve new car profits;
Insight into online sales leads, benchmarking analysis of the long and short board of online sales operations, to help improve online operation capabilities; potential passenger heat distribution insights, grasp the dynamic distribution of potential customers of different car systems in the city, help offline marketing activities accurately touch customers, improve budget delivery efficiency.
In addition, Autohome can also use Ping An Property & Casualty's offline capabilities to jointly build a comprehensive team of dealer 4S store commissioners, the core purpose is to improve the digital service quality of Autohome and dealers through offline personnel, and expand the customer share of Ping An Auto Finance and Property & Casualty Insurance. At present, Auto Dealers Hui covers 177 cities across the country, mainly providing sales service support through 400 telephones, while Ping An Property & Casualty has more than 10,000 car dealer sales staff and 22,000 cooperative merchants.
"Home + Ping An" plans to complete the construction of the dealer 4S comprehensive commissioner team within 3 years, and 1 commissioner serves 1-2 4S stores, and such a huge offline sales and service team is not available in the other two vertical platforms.
Further, after the platform and the dealer's digital in-depth cooperation, the digital operation of the main engine factory has become the biggest pain point in the entire sales link, of which pricing is an important reason for the increasingly low operation utility of the main engine factory", one is because there are many factors affecting the promotion of vehicles and it is difficult to obtain, resulting in the real transaction price of the terminal market is often difficult to obtain in real time; second, the promotion policy design is extensive, not completely based on data, mainly based on the needs of regional sales companies; third, the policy is difficult to effectively release. Because of geographical differences and user preferences, the span is large.
To this end, "Home + Ping An" can combine the dealer promotion policy mastered by the former, as well as the real transaction price within a specific region, and create an optimized intelligent tool for the promotion cost for the OEMs by analyzing the cross-price elasticity of the two, including building key factor relationships such as sales volume/price/promotion, formulating annual/quarterly promotional policies for the sales department of the OEMs, providing data analysis algorithms and intelligent policy-making tools.
In summary, "Home + Ping An" provides a new supply for the new retail of the automobile industry in the three dimensions of people, goods and fields. "People", high-quality customers in the Ping An ecosystem are highly overlapping with new energy car owners; "goods", digital cooperation with dealers and OEMs; "field", auto home for customers to customize the new online marketing scene.
[3] OEMs digitize
In fact, the value of the whole vehicle has gradually been caught up or even replaced by software and automotive electronics, and the automobile profit model has shifted from one-time vehicle sales to the premium generated by continuous software services, and car companies need a role change from selling products to selling services. Immersing this mode of thinking into the production operation of the main engine factory, then the digital platform transformation will be the general trend, including the need to order production, digital inventory management and pricing strategy, and the feedback link for shorter and more direct user use.
As shown above, in addition to providing digital pricing strategies to OEMs in new retail, "Home + Ping An" can further package and combine Home's industry know-how and Ping An's technology capabilities to the OEMs, helping the overall digital transformation of OEMs.
Figure: Digital link in the automotive industry, source: 100 million euros
Compared with the new car-making forces such as "Wei Xiaoli", most of the domestic OEMs belong to the background of state-owned assets, the departments are relatively fragmented and the system is cumbersome, the digital transformation of the internal evolution is slightly conservative, and the rational introduction of external management consulting teams to promote the digitalization process is the top priority to complete the transformation.
In this regard, Ping An Group has the advantage of providing strategic consulting services for state-owned enterprises and central enterprises, and Ping An of China and the State-owned Assets Supervision and Administration Commission (which is likely to be its direct central enterprise) have established a joint venture consulting company, China Consulting Strategic Management Co., Ltd., which is a subsidiary of Ping An Group that exports professional management ideas and concepts to the outside world, including key themes such as strategic planning and digital transformation, and will mainly focus on the fields of central enterprises and state-owned enterprises such as energy, manufacturing and infrastructure.
Focus on the state-owned main engine factory, the cooperation between the main engine factory and the external data is conservative, resulting in online and offline has not been completely opened, the current data application is mainly based on monitoring and forecasting, the lack of attribution analysis and real-time decision support for historical data, and dealer sales rely heavily on the operation mode of personnel, and the digital ability of offline sales is lacking.
Under the cooperation model of "Home + Zhongzhi", Through "user + content + product data + digital experience in the automotive industry", and The development goal of China Consulting is committed to the consulting business of state-owned enterprises, the two sides have joined hands to deeply customize digital business processes and intelligent decision-making capabilities for state-owned OEMs to promote the digital transformation of state-owned OEMs, which is unique among all automotive vertical platforms.
Figure: Ecological schematic diagram of the "Home + Ping An" car, source: RESEARCH Department of CICC
In addition, Autohome has the largest industry knowledge base in the whole network, and has the leading ASR (automatic speech recognition) technology in the automotive industry, combined with Ping An's technology resources, and has the ability to build an in-vehicle voice system. It is expected that the combination of the two, in the early stage, can be jointly built with the head oem to create a general vehicle voice, and then meet the customized needs of the main engine factory.
Nowadays, in the face of the cognitive baptism of new energy brands on consumers, the digital transformation of traditional OEMs has become the general trend of the entire automotive industry, and "Home + Ping An" can combine the user use information of Home and Ping An's scientific and technological strength to form a variety of SaaS solutions for car companies through the state-owned enterprise background and resources of China Consulting Strategy Company, and promote the digitalization process of the automotive industry.
03
Growth deduction
The growth of China's passenger car market has been stable at 20 million units/year for many years, while the scale of stock vehicles has reached nearly 300 million. For the "home + ping an" positioned as a vehicle ecology and automobile integrated service provider, the automobile incremental market is the β, while the stock car market is the α, and the new supply around the α will bring benefits that exceed market expectations.
According to the Ministry of Public Security, the number of motor vehicles in the country will reach 395 million in 2021, of which 302 million are cars. If calculated according to the average annual maintenance of the car 400 yuan, the annual market size of the after-car maintenance is about 120 billion yuan; in addition, with the market size of car washing, auto parts, modification and other market segments, the annual scale of China's car aftermarket is at the level of 2 trillion; with the continuous expansion of the scale of stock cars (the average domestic vehicle age is more than 5 years), the huge automobile comprehensive service market will bring very considerable growth if it can be effectively integrated.
Figure: The size of China's aftermarket, source: Ipsos business consulting analysis
At the same time, most of the companies participating in the automotive aftermarket are constrained by the "scattered, small and chaotic" constraints of the overall market, and it is difficult to provide car owners with standardized all-purpose car cycle service solutions. However, the combination model of "Autohome + Ping An" opens up the closed-loop link of online and offline automobile comprehensive service ecology, and will produce greater network effects through the superposition of subdivision plates.
In this way, after the connection between Autohome and Ping An Data, Autohome, as the core component of Ping An's car ecosystem, will form resource sharing and equity co-construction with other brother subsidiaries, and jointly form the "equity middle platform" of Ping An Automobile's ecosystem. After accessing Ping An good car owners, the coverage rate of the core population of "car use" in their "car viewing, car buying, and car use" will be expected to increase exponentially, while the cost of the car home will also be reduced.
Figure: Schematic diagram of the strategic upgrade of autohome, source: CICC Research Department
According to the relevant research reports of CICC, in the process of strategic upgrading of "Home + Ping An", The platform operation and various subdivisions of ecological businesses have achieved good growth. According to QM statistics, the daily active users of the autohome mobile terminal climbed to 46.9 million at the end of 2021, an increase of 11.4% year-on-year, exceeding the sum of the second and third places.
The recent financial announcement shows that in 2021, Autohome's total revenue for the whole year was 7.24 billion yuan, the adjusted net profit was about 2.58 billion yuan, and the adjusted net profit margin was 35.7%. Revenue from new businesses (including used cars, new energy, data technology, etc.) was 2.24 billion yuan, an increase of 11.6% year-on-year, and the total revenue of business increased from 23.2% in 2020 to 30.9%.
Among them, Autohome has established cooperation with 22 mainstream new energy brands, and the annual revenue from new energy brands increased by 128% year-on-year, accounting for 60% of the vertical media market of major new power brands; at the same time, it has brought many digital solutions through the research and development and application of AI and AR/VR technology capabilities, and the average number of products used by a single merchant in digital dealers in 2021 increased by 18% year-on-year to 3.59.
Figure: Schematic diagram of the automotive value chain, Source: Network
It can be seen that the identity positioning of Autohome as an integrated service provider has been initially verified by the market, and the synergistic ecological effect of connecting "users, OEMs, dealers, and aftermarket suppliers" is gradually strengthening, that is, it provides integrated buy-and-buy full-cycle services to C-end users, and provides full-chain digital marketing solutions to B-end customers, which has become a new growth curve.
In the future, with the upgrading of autonomous driving technology and the supporting land of relevant regulations, the living service space attribute of smart cars will be sharply strengthened, and the value of comprehensive services around this attribute will dominate the entire automotive industry value chain, and its commercial potential is self-evident, and this growth curve will exceed market expectations.
Figure: Second curve, source: network
As China's no.1 automotive vertical media and integrated information service platform, Autohome, which has been established for 17 years, records the entire process of China's automotive industry from joint ventures to the rise of independent brands in the era of internal combustion engines, serving China's most extensive generation of automobile consumers and growing up with them. In a sense, the information and service content carried by autohome so far is the most important history of China's automobile industry. Facing the future, as the history of China's auto industry has turned to a new page, the recorder and participant of industrial history has also ushered in his own moment of value reconstruction.