In April, under the spring breeze, the grass breaks out of the ground and the green leaves show sharp corners, presenting a scene of spring. However, some trees whose roots have rotted are difficult to grow new shoots.
Recently, GAC Group released the March production and sales express report. According to the data, in March 2022, GAC Group's production and sales were 227,600 units and 227,500 units, up 24.4% and 30.7% year-on-year, respectively. From the perspective of specific brands, GAC Toyota and GAC Honda are still the sales pillars of GAC Group, with monthly sales of 97,000 units and 76,800 units respectively. In addition to "Two Fields", GAC Mitsubishi and the independent brands of GAC Group have performed well.
However, it is confusing that GAC FCA produced and sold only one vehicle in March, and the year-on-year growth rate of production and sales plummeted by 99.96% and 99.97% respectively. Although the automotive market is currently affected by the pandemic and the supply of parts, it is difficult to understand that production and sales are only 1 unit. As for the reasons, even if the GAC Group and the Stellantis Group have not announced it, we have already tested the sales volume of GAC FCA in recent years.
From "peak" to "bottom", it only takes 7 years!
GAC FCA was established on March 9, 2010, jointly invested by GAC Group and Stellantis Group with a 50:50 equity ratio. Subsequently, GAC FCA's main brand Jeep was officially localized in 2015. As the first model of GAC FCA, the Free Light was warmly welcomed by the market as soon as it was listed. With the subsequent introduction of guides, free rangers and other models, GAC FCA ushered in a highlight moment in 2017, with annual sales of 179,900 units and 222,300 units in 2016 and 2017, respectively.
Unfortunately, the good times are not long, and GAC FCA has been in decline since 2018. According to relevant data, GAC FCA's annual sales from 2018 to 2021 were 125,200 units, 73,900 units, 40,500 units and 20,100 units, respectively.
In the context of plummeting sales, GAC FCA has also fallen into a financial crisis. According to relevant data, GAC FCA has accumulated losses of nearly 5 billion yuan in the past three years. Among them, the annual net assets in 2020 fell from 1.336 billion yuan at the beginning of the year to -331 million yuan. According to GAC FCA's 2021 semi-annual financial report, GAC FCA's total assets are 10.339 billion yuan and total liabilities are 11.778 billion yuan. In other words, IT took ONLY 7 years for GAC FCA to go from its peak to its insolvent predicament. So why did GAC FCA end up like this?
Outside must first be inside!
For the reasons for the decline in sales of GAC FCA, some people have put forward a view that "the rapid decline in the heat of the SUV market has made GAC FCA lack of opportunities to exert strength." It is undeniable that when the "outlet" of the SUV market returned to calm, the sales of GAC FCA were affected to a certain extent. However, Brother Cylinder believes that the market is not the real reason for the defeat of GAC FCA, the real reason is still in itself.
First, the birds are exhausted, the good bow is hidden; the cunning rabbit dies, and the lackey cooks. After Jepp parted ways with Beijing Motor, the brand image fell to the bottom for a long time. However, it is such a marginalized car company that has become a mainstream car company in just a few years. The slogan "Not all jeeps are Jeep" not only allows the Jeep brand to enter the Chinese market with the brand image of an SUV manufacturing expert, but also competes with other joint venture brands with a single product sequence. Behind this achievement, it is inseparable from its founder - Zheng Jie.
As one of the few female executives in the automotive field, Zheng Jie has an extremely keen insight into the market and super execution. Since joining Chrysler in 2008, Zheng Jie has gradually moved to the position of president of GAC FCA. To this day, Brother Cylinder still remembers a sentence when Zheng Jie was listed on the market of Jeep Commander, "What kind of product philosophy to choose determines what kind of product a brand will create and what kind of distinctive temperament it has." ”
Perhaps it is the advantage of women, during Zheng Jie's tenure, the emotional marketing of the Jeep brand is unparalleled in the entire domestic market, such as "the mountains and seas loved, the mountains and seas can be flat", "or go in the dream, or really go with the Wrangler", every sentence stirs your poetry and far away. Under the advantages of reshaping the brand image and integrating sales channels, GAC FCA has become a mainstream brand in the domestic market in a very short period of time. There is no doubt that as the helmsman of GAC FCA, Zheng Jie, is indispensable.
Unfortunately, when the automobile market crossed from the incremental market to the stock market, coupled with the decline of SUV models, GAC FCA's annual sales in 2018 declined. At the same time, the crisis of dealers has caused GAC FCA's brand image to decline.
In the face of this series of difficulties, Zheng Jie and his team are not without efforts to save the decline of GAC FCA, such as adjusting product planning, and gradually moving closer to home SUVs with Jeep products that will show the image of tough guys. In addition, in order to strengthen the future competitiveness of the Jeep brand, Jeep has accelerated the introduction of new energy products, hoping to accumulate and develop.
However, GAC FCA did not choose to be merciful because of Zheng Jie's future plans, and before sales improved, they were eager to "send away" the former heroes. Therefore, we cannot predict whether Zheng Jie's forward-looking layout will become the key to GAC FCA's reversal of the situation. In contrast, what we have basically determined is that the "helmsman" after Zheng Jie did not have the strength to turn over, but accelerated the decline of GAC FCA.
Second, the changers are born, and the old keepers die. If Zheng Jie relies on his own advantages in the field of communication to bring the influence of gac FCA Jeep's brand to the peak, then Jeep's obstacles in the subsequent development process are also influenced by Zheng Jie.
In 2010, in the case of niche positioning of the Jeep brand, Zheng Jie made a very bold decision to elevate the positioning of the imported Grand Cherokee to the level of luxury brands, so that Chinese car owners could not help but compare this model with BMW X5 and Audi Q7. In order to strengthen the high-end positioning of the product, Jeep even invited Wang Shi, who was recognized as a Leader in the Chinese business world at the time, to star in the advertisement. With a phrase of "strength makes feelings land", It has successfully made Jeep gain a firm foothold in the Chinese market.
With the high-end brand image established by grand Cherokee, it has successfully driven the sales of free light, guide and other models under GAC FCA Jeep. However, Zheng Jie paid too much attention to marketing, ignored the needs of Chinese consumers at that time and even today, and did not "localize" the products in a timely manner, which eventually led to Jeep gradually losing competitiveness due to the lack of diversified products.
At the same time, the "machine throttle" storm of GAC FCA has completely shattered the brand image that GAC FCA has hard to establish. After the hot sales in 2017, as the market ownership of Jeep Free Light continues to increase, some potential quality problems have also begun to surface, such as "engine burning oil".
In fact, the problem of "burning oil" has appeared in other brands of models, but it has not led to a rapid deterioration of the brand image because of this product quality problem. The main reason why GAC FCA Jeep will plunge itself into the whirlpool of public opinion because of this incident is that GAC FCA did not communicate with dealers and car owners in time.
Faced with the problem of "engine burning oil", most free light owners have not been solved after communicating with 4S stores several times. In addition, the manufacturer's hotline is also useless. When looking at the quality problems of the product, gac FCA's attitude is "only change and not repair and not recall", as for the dealer, not only refuse to admit that there is a quality problem in the product, but also adjust the oil scale line in the car without authorization.
Although GAC FCA finally launched the recall of the 2.4L engine under pressure, after the exposure of the March 15 evening party in 2018, the "machine throttle" incident made Jeep completely lose its brand credibility. Perhaps this is why GAC FCA's Jeep sales can no longer return to the peak.
Third, the foundation is unstable and the expansion is too fast. The above-mentioned "machine throttle" incident, in addition to damaging the brand image, also exposed the fragile service system problem behind the rapid expansion of GAC FCA.
According to relevant data, after GAC FCA tasted the sweetness of SUV dividends in 2016, it began to rapidly expand its dealer network, with more than 400. For reference, FAW-Volkswagen, which has an annual sales volume of about 2 million vehicles, has only about 1,000 first-class dealer networks nationwide.
On August 15, 2018, GAC FCA had a conflict with a dealer. A number of Jeep dealers from all over the country went to Shanghai to defend their rights, which was caused by the National V inventory problem. According to some dealers at the time, the reason why GAC FCA was able to break through the annual sales of 220,000 vehicles in 2017 was that nearly 200,000 sales were pressed into the inventory of dealers. It is worth mentioning that the highest inventory warning value of GAC FCA is 1:7.
Due to the serious squeeze of inventory, many dealers have experienced a tight capital chain, and even near the brink of rupture. In order to achieve capital turnover, dealers have to choose to lose money. This behavior not only led to market price confusion for Jeep's models, but also caused the brand's credibility to decline again.
The crisis facing GAC FCA today comes from the crisis that broke out in many aspects such as products, channels, and word of mouth. In this regard, Brother Cylinder believes that today's GAC FCA should not focus on any one "point", but solve the problem from the overall perspective. If the external environment continues to deteriorate at this stage, then GAC FCA, which is not strong in the system, will eventually only "leave the market".
Exit countdown?
In the face of the current crisis, GAC FCA and the two major groups behind it are not sitting still. In order to "rescue" GAC FCA, GAC Group and Stellantis Group saved themselves through capital increase and coaching. According to relevant data, GAC Group and Stellantis Group jointly injected capital into GAC FCA during August 2020 and July 2021, totaling 4 billion yuan.
In addition, GAC FCA also publicly announced in 2021 that it will launch a new strategy of One Jeep in the Chinese market, merging Jeep from previously imported channels with Jeep products from domestic channels to unify Jeep's image in the Chinese market. For Jeep's strategic measures, after discussing with some people in the industry, Hege agreed that if GAC FCA wants to escape the "mud" at this stage, it is particularly important to re-examine the Chinese market.
Combined with the strategy of BMW, Mercedes-Benz, Volkswagen and other car companies, the simple introduction of foreign models is no longer enough to impress Chinese consumers, because only products that meet the needs of Chinese consumers are more attractive, which is why many joint venture brands have repeatedly shouted the slogan of "in China, for China". Therefore, today's GAC FCA is really difficult to believe that it can change.
summary
In fact, many people will wonder, does GAC FCA really have a chance to turn over? On this issue, Brother Cylinder believes that there are opportunities, but it is very difficult, especially under the premise of the rapid rise of independent brands. Whether it is last year's hot-selling tank 300, or other domestic SUV models, it not only meets the needs of consumers for youth and diversification, but also has a short iteration cycle of product updates and guarantees product quality. Therefore, if GAC FCA wants to make a comeback, the first thing to bear is not to "change the coach" or "increase capital", but to abandon the past thinking and dare to break the old and build the new.