The knockout rounds have begun
Author | Lang Xuehong
Edit | Zhen Yao
Produced by | Bangning Studio (gbngzs)
| Editor's Note
On April 27, 2022, at the 2022 Blue Book Forum of the Automobile Circulation Industry, the 2021-2022 China Automobile Circulation Industry Development Report (hereinafter referred to as the "Report") was released. Lang Xuehong, deputy secretary-general of the China Automobile Dealers Association, made a comprehensive interpretation of the Report and sorted out the current situation of China's automobile dealer groups in 2021.
Lang Xuehong believes that the development of dealer channel networks in 2021 shows four major trends. First, the new energy sales channels coexist with the network and the sub-network. Second, dealer groups have increased the layout of luxury brands and new energy. Third, new and old forces are exploring channel changes, and the boundaries between models are blurred. Fourth, the service channels for new energy vehicles are being reshaped.
In her view, the rapid development of the new energy vehicle market has led to the rapid expansion of the channel network. In terms of channel form, three major networks of 4S sellers, showrooms/experience centers, and after-sales service centers have gradually formed, and each undertakes different functions.
"At present, brands are constantly exploring channel changes, and the actual channel models of both new forces and traditional manufacturers have shown some ambiguity." Lang Xuehong said that among the new forces, Weilai adopts a direct operation + generation operation model, and Xiaopeng adopts a direct operation + agent model; traditional manufacturers start from a certain model to test more models.
The following is an excerpt from the speech, compiled by Bangning Studio according to shorthand.
01.
Where channel growth comes from
Blue Book statistics show that in 2021, the mainland automotive channel network will cover 98 passenger car brands. Among them, there are 25 luxury/ultra-luxury brands, 19 mainstream joint venture brands, and 54 independent brands.
We list some representative brands, and all the data are based on these 98 brand networks, and the corresponding statistics and combing are made.
First of all, it is the number of sales and service networks of 4S stores nationwide. In 2020, it was 28,229, down 5.3% year-on-year; in 2021, it was 29,318, an increase of 3.9% year-on-year.
Where is the growth coming from?
One is luxury brands. Mercedes-Benz, BMW, Audi, including Lexus and Volvo, were at the top of the luxury brand increment last year.
The second is the new energy brand. The new forces, except Tesla, are all Chinese brands. Weilai and The ideal are mainly directly operated, and Xiaopeng and Nezha have made important contributions to the growth of the channel network.
Third, the strong rise of Chinese brands has led to the expansion of channel networks. BYD, Changan, Chery, etc., contributed greatly to last year's increment.
Every year, dealers exit. In 2021, about 1400 companies will withdraw from the 4S sales service network. Among them, the joint venture brand withdrawal accounted for up to 57%, mainly Beijing Hyundai, SAIC-GM Buick, Dongfeng Peugeot, Guangfik, SAIC Skoda, etc., as well as some dealers after Changan Mazda and FAW Mazda were adjusted after grid integration.
With the rise of Chinese brands, it is reflected from the side of the channel network that the joint venture parity brand is facing greater competitive pressure.
The share of Chinese brands will continue to increase. Imported or multinational companies are more concentrated in the high-end. Joint venture brands that are close to the price of Chinese brand products are facing pressure to withdraw from the Chinese market in the future, and the knockout round has begun.
The withdrawal includes second-tier luxury brands. Acura and Infiniti have withdrawn from the network more, and acura network has merged with Guangqi Honda.
02.
Luxury flat, joint venture reduction, independent rise
Judging from the brand grouping, there are more than half of the Chinese brands, and the network share is still increasing. The luxury brand network is basically the same as last year, while the number of joint venture brand networks is decreasing.
Let's start with luxury brands. The total number of ABB networks is 500 to 600, but the sales volume of second-tier luxury brands is low, and the number of networks is relatively low, which reduces the average number of channel networks of the overall luxury brands.
Among the joint venture brands, brands with more than one million sales, such as North and South Volkswagen, including Dongfeng Nissan, have a network of nearly 1,000. However, due to the squeeze of Chinese brands, the proportion of networks in 2021 fell by 2.4 percentage points.
Among Chinese brands, the network forms of new energy channels are diversified, so the average number of 4S networks of a single brand in traditional channels and independent channels of new energy varies greatly.
Brands with annual sales of more than one million, the number of networks in the network of about 1,000, including North and South Volkswagen, SAIC-GM-Wuling, Great Wall Motors, Geely Automobile and so on.
The green part specially listed belongs to the independent new energy independent sub-construction network. These networks have not developed for a long time, including some new power brand networks, and the number of single-brand networks is less than 100.
03.
East Missyshy
In terms of the situation of different provinces, in 2021, the distribution of the automobile channel network shows the characteristics of east and west. The network growth rate in most provinces and cities is positive, and the network growth rate is higher in inland provinces, especially in the northwest provinces.
Like Guangdong, Shandong, Jiangsu and other major automobile consumption provinces, the number of networks ranks in the forefront. The western and northern provinces are sparsely populated, and the network is not fully covered, but the increase has emerged. As cars continue to spread to car-free households, the network of economically underdeveloped provinces will take the lead in layout.
At the city level, more than 300 prefecture-level cities in the country can be divided into six levels. Different population sizes, different levels of development, and automobile sales service outlets are different.
In 2021, the proportion of networks in first-tier cities and fifth- and sixth-tier cities may remain flat or decline. The proportion of networks in second-, third- and fourth-tier cities has increased, and the network growth is mainly due to the expansion of Chinese brands and the strong growth of new power brands. The decline in the proportion of networks in first- and fifth-tier cities is mainly due to the adjustment of the network structure of weak joint venture brands.
From the perspective of urban coverage, the coverage rate of luxury, joint venture and independent cities is 81%, 97% and 98% respectively. Representative brands are Mercedes-Benz, BMW, GAC Toyota, FAW-Volkswagen, SAIC-GM-Wuling and Haval, all of which have achieved 1-4 level urban coverage, while the coverage rate of 6-tier cities is quite different.
There are nearly 5,000 4S networks in the county (excluding urban areas), accounting for more than 15%. Among them, there are more than 500 county-level 4S networks in Zhejiang, Jiangsu and Shandong provinces.
We particularly note that the Yangtze River Delta regional economy is more developed, and the top 100 counties are basically concentrated in these provinces, attracting a large number of 4S store investment layout. Taking Zhejiang as an example, the county-level economic layout network accounts for 35% of the total number of networks. The last in line is mainly a municipality, and the municipality has been completely urbanized in Chongqing, so the county network is zero.
In the future, the sinking of channels is still dominated by county economies, and there are already 4S stores laying out car sales in county economies. The data shows that the total GDP of the country's 2,000 counties and county-level cities accounts for nearly 40% of the country, the proportion of the population is higher, more than 50%, and the layout of the automobile network is only 15%. The number of cards on the county is not precise, estimated to be between 15% and 20%, and dealers are mainly concentrated in car-free households in these areas.
As for the main investment of 4S stores, if a dealer group is called a channel investor, having 3 or more stores is defined as a small group or group operation. Such dealer groups have more than 1600 in the country, and the collectivization rate is 61.8%. There are more than 800 dealer groups with 3 to 5 4S stores. There are 14 dealer groups with 100 or more 4S stores.
Compared with U.S. dealer groups, China's large-scale investment groups are more concentrated. For example, Guanghui Group has nearly 800 stores and Zhongsheng Group has 400 stores. The number of groups with more than 100 stores is higher than that of the United States, and the concentration of the network of Chinese head groups is higher.
For the automobile circulation industry, it is not necessary to have more than 100 stores to have a strong competitiveness. The regional group with thirty or fifty stores is still very competitive.
04.
Supermarkets are developing rapidly
The rapid development of the new energy vehicle market has led to the rapid expansion of the channel network. In terms of channel form, three major networks of 4S sellers, exhibition halls/experience centers, and after-sales service centers have gradually formed, each of which undertakes different functions.
In 2021, the number of various outlets of new energy vehicle channels will exceed 6,000. Among them, there are more than 5,000 independent sales experience stores (including 4S forms). There are 2,093 4S stores in the 4S form (including 4S stores under the authorization mode, and sales and service stores under the direct operation and agency mode). There are 2966 showrooms/experience centers, accounting for 48.5%. There are 1062 after-sales service centers, most of which are shared with traditional fuel vehicles.
There is also the supermarket model. In 2021, new energy supermarkets located in shopping malls/shopping malls will develop rapidly, reaching more than 2,200. Nearly 70% of the supermarkets are concentrated in 20 cities, of which more than 100 are in Shanghai, Shenzhen and Beijing.
The supermarket appeared after the completion of Tesla's first experience center, built in Beijing's Yerba Buena, and there are currently more than 200 experience centers across the country. Tesla and Wei Xiaoli networks are mainly distributed in first-, second-, third- and fourth-tier cities. The new forces mainly have a layout in first- and second-tier cities, and third- and fourth-tier cities also have layouts, especially in the eastern coastal areas.
As of December 2021, the number of channel networks varies greatly by brand. Among them, Xiaopeng Automobile has the largest number of brand outlets and Tesla has the least. In terms of geographical coverage, each brand basically covers all provinces in the country, but the number of cities covered is different, xiaopeng motors cover the largest number of cities, and Tess has the least.
All brands attach importance to the layout of outlets in high-tier cities, and the coverage rate in 1-3 tier cities has reached almost 100%. However, in third-tier cities and below, the difference in the layout of outlets has emerged, with Xiaopeng Motors having more dense outlets in lower-tier cities and Tesla being relatively low.
From the perspective of the number of networks, among the several new forces, there are fewer ideal cars, but the number of outlets that appear in the statistical process is the largest. For example, in a shopping mall, it does not have a fixed storefront, and may be displayed in the aisle area, making the investment more economical and more flexible. In a place as short as a month or two, as long as less than a year, with the consumers in the area to reach, after reaching the target will change a place, this is the pop-up store.
Relatively speaking, the location of 4S stores is fixed and long, and the time of supermarket stores is short and not fixed. In addition, after the supermarket achieves the marketing effect, it can change its position. These all determine the great difference between supermarkets and 4S stores.
For the number and density of supermarkets, we have done city-level combing. The higher the city level, the higher the proportion of showrooms/experience centers. Among them, there are more than 2,200 supermarkets located in shopping malls, accounting for 75.3% of the exhibition halls/experience centers.
The density of supermarkets in first-tier cities is the largest, with an average of about 107 supermarkets in each city. Like Beijing, there are hundreds of supermarkets. In the future, the resources of commercial supermarkets with superior geographical location and reasonable rents must be tight resources.
As more and more auto manufacturers enter supermarkets, it is bound to bring about a rise in the water. Supermarket funds are getting higher and higher, and the input and output are not cost-effective. In this context, whether the supermarket is sustainable and rapid development is a future research topic, at least for now, some good commercial business district resources are limited.
Judging from the distribution of new energy supermarkets, there are more than 100 in Shanghai, Shenzhen and Beijing. Among the top 20 cities in terms of the number of supermarkets, Beijing, Shanghai, Tianjin and Chongqing are among the four municipalities directly under the central government.
There are also 9 provincial capitals (Hangzhou, Nanjing, Hefei, Wuhan, Changsha, Zhengzhou, Chengdu, Xi'an, Guangzhou), and the other 7 (Shenzhen, Dongguan, Foshan, Suzhou, Ningbo, Qingdao, Wenzhou) are the more economically developed cities in the eastern and southern coastal provinces.
05.
Four megatrends
▍Trend 1: New energy sales channels coexist with the common network and the sub-network
With the rapid development of the new energy vehicle market, manufacturers have increased their investment in channel construction. And based on their own situation, choose the common network or the networking method.
Luxury brands mainly use grid-connected methods, and when Chinese brands launch new energy high-end sub-brands, most of them adopt the grid-sharing method. Among the joint venture brands, the North and South Volkswagen ID. series, on the one hand, sell in the original channels and network, on the other hand, encourage agents to build supermarkets in commercial centers. Guangqi Honda releases a new electric vehicle channel e:NP.
Whether it is a branch network or a common network, the future will face challenges. The key is to ensure the professionalism of new energy-related services and balance the interests of existing channel networks.
▍Trend 2: Dealer groups increase the layout of luxury brands and new energy
Luxury brands have performed well under the impetus of consumption upgrading trends, so small and medium-sized groups and single stores of luxury brands have become the main targets of recent channel mergers and acquisitions.
In May 2021, Xinfengtai acquired three stores: Porsche Xi'an, BMW Yinchuan and BMW Xining. In July, Zhongsheng Group acquired Renfu, expanding the Mercedes-Benz network in the west and south, becoming the second largest mercedes-benz dealer. In August, Meidong acquired 2 stores in Nanjing Xiezhong, consolidating the position of Lexus Second Dealer Group...
▲Zhongsheng Group's dealership brands and regions are as above
The rapid development of new energy vehicles has also brought new opportunities to dealer groups, and the head dealer groups have laid out new energy vehicles.
Zhongsheng Group signed a strategic cooperation agreement with Xiaopeng Automobile and others to land a new car delivery center and a supermarket in Shenzhen. Yongda Group has 13 newly opened outlets for new energy brands and 15 newly authorized independent new energy brands, including BYD, Xiaopeng Automobile, Euler, AITO, Zero-run Automobile, etc. Harmony strategic investment "Bell Bell New Energy" has been authorized by ideal automobile, Weilai automobile, Xiaopeng automobile, GAC Aean and other brands sales and after-sales service authorization......
▍Trend three: New and old forces explore channel changes, and the boundaries between models are blurred
At present, brands are constantly exploring channel changes. Whether it is a new force or a traditional manufacturer, the channel model shows some ambiguity.
The direct operation model and agency model represented by the new car-making forces have gradually been accepted by the industry and consumers. The automobile sales channel is showing a new trend of licensing mode and multiple channel models coexisting.
From the authorization model to the agency model, and then to the direct operation model, automakers are investing more and more heavily in channels, and their control over channels is getting stronger and stronger.
Among the new forces, Weilai Automobile adopts a direct operation + generation operation model; Xiaopeng Automobile adopts a direct operation + agency model. Traditional car manufacturers start with a certain model and test more models.
Several typical patterns are as follows:
First, the traditional authorization model.
The manufacturer does not bear the inventory, and the inventory is borne by the dealer. Under the traditional model, the dealer is a reservoir function, can adjust the risk, when the market pressure is high, the inventory is high, when the market is sold, the inventory is low.
In this mode, the manufacturer formulates the guidance price, and the dealer sets the terminal sales price according to the strategy. Prices vary from dealer to dealer, and if unified, it involves the issue of horizontal price agreements. In terms of store ownership, the dealer invests, leases land, buys land, builds the storefront, and the dealer is responsible for operation.
Second, the proxy model.
Inventory is borne by the manufacturer. Because the price is an agent, there is no need to purchase a vehicle, and it is only responsible for the pre-collection and subsequent delivery services. Therefore, this model cannot directly own the ownership of the vehicle. The price is consistent with the manufacturer, the store is funded by the agent, and the operation is responsible for the agent.
Third, the direct operation model.
Automakers operate on their own: responsible for inventory, responsible for distribution, funding the construction of stores, recruiting employees, and responsible for store operations.
Each of the above three models is typical. Licensing models such as WM Motors, Jihu Motors; agent models such as SAIC Audi; Tesla is a typical direct operation model.
Through communication with OEMs and dealer interviews, we found that the boundaries between direct agents and authorizations are still relatively blurred, and manufacturers also have some swings in the development process.
Taking Weilai Automobile as an example, some of the early stages are close to the agent store, operated by the main engine factory. But as the shortage of funds was solved, its stock price climbed all the way, and these stores gradually turned into direct-operated stores after expiration.
▍Trend 4: New energy vehicle service channels are being reshaped
In the early days, most of the after-sales channels for new energy vehicles represented by the new forces of car manufacturing adopted the method of self-operated service centers and sheet metal spray business authorized to independent after-sales comprehensive repair factories. With the increase in ownership, the new power brand began to lay out the direct operation of sheet metal spray center.
For example, Tesla, Weilai Automobile, etc., in the early stage, are authorized dealer groups to do sheet metal spraying, do store maintenance, do authorized services, but with the growth or expiration of ownership, they will withdraw the after-sales authorization and do their own after-sales direct operation. The process is constantly changing.
Therefore, with the increase in the ownership of new energy vehicles, new energy brands build self-service centers, integrate service functions such as sheet metal and delivery, and the original "specialized and refined" multi-format network form is partially replaced by the 4S format integrating sales and services.
Since 2021, many traditional manufacturers have tried online sales models to pave the way for future direct sales.
Place orders directly on the APP, pay directly to the manufacturer, and the dealer swipes to the manufacturer's account through the POS machine, which are some attempts. North and South Volkswagen first began to make new energy ID products a separate agency system, dealers do not have to bear inventory, manufacturers are responsible for invoicing, unified price sales.
GAC Toyota Highlander began to do online mode to achieve online orders. The Great Wall Tank brand is paving the way for direct sales. Volvo is also trying, in the existing store or supermarket store, the manufacturer directly operated on behalf of the dealer, the dealer invested in the store, similar to some of the stores in the early days of Weilai Automobile.
At present, it is difficult to draw conclusions about these different models. Everyone says that when Tesla reaches an annual sales of 200,000 or 500,000 vehicles, can it still adhere to direct operation? It is not yet possible to draw conclusions.