How to win the trust of car owners by "stealing beams and changing pillars"?

Tuhu (HK: 09690, referred to as "Tuhu"), known as the "No. 1 stock in the automotive aftermarket", has been pushed to the forefront of public opinion due to the problem of automobile aftermarket.

Recently, a consumer released an exposure video saying that the two offline stores of Tuhu Car Maintenance have problems such as mismatched goods, bundled consumption, and disorderly repairs, which are suspected of consumer fraud. Although Tuhu has severely punished the staff involved and closed the store for rectification, the credibility of Tuhu has still aroused social concern.

Tuhu, which relies on franchise stores to emerge and make a profit, is now trapped in the quagmire of the franchise model. In the future, how will Tuhu win the trust of people and how will it serve the majority of car owners?

1. The store stole beams and changed pillars, and the exposed video was taken off the shelves

The exposed video shows that the consumer sent his two cars to two Tuhu offline stores for repair. However, under the Tuhu service convention of "no bundled sales, forced consumption" and "no use of fake parts, shoddy", both stores had service problems.

The first store said that the vehicle had a water pump problem, but the final replacement part was a thermostat, but the store explained that "the water pump and thermostat are one accessory" and asked consumers to pay the price of the accessories that integrate the pump and thermostat. However, after calling the 4S store, the consumer learned that the two accessories were independent of each other and were not one piece.

Not only that, consumers found that the content of the purchase list of replacement accessories provided by the store was also full of loopholes, not only did the business license of the payment company and the store not match, but also the product model, name, parts number, production date, and purchase date on the purchase list were not indicated.

In addition, there are suspected cases of no sick leave repairs during the maintenance process of the store. The clerk claimed that the car "cracked the water pipe in the water tank" and used 502 glue to stick it without the consumer's knowledge. According to the professional car repairer asked by the consumer alone, this situation can only be man-made damage, and there is no accident.

Although the second store gave a promise and quotation of "original original", it actually provided third-party accessories that advertised "original quality". After the consumer raised questions, the clerk changed his tone, saying that "the working hours are exempted, and the previous money will be returned to the original way, and the money for two new accessories will be paid."

Soon, the matter of "Tuhu car maintenance was exposed to cheat routines" appeared on the hot search, and many users who claimed to be Tuhu car maintenance consumers shared their experience of "being pitted" when Tuhu maintained cars for car maintenance under related topics, pointing to the repeated problems of minor illness and major repairs of Tuhu car maintenance, and the problem of disorderly repairs without diseases has occurred repeatedly, and it is suspected of consumer fraud.

Tuhu responded the next day that the original Audi water pump and thermostat assembly and Renford engine bracket glue purchased by the customer in the store in the online video are genuine and not "fake", and the company can provide customers with purchase vouchers through regular channels, and the customer has confirmed the brand and quotation of the goods through the "electronic quotation".

Tuhu also admitted that the relevant stores had misled customers in the process of answering customer inquiries and provided wrong maintenance plans, and that the two stores and technicians involved had been severely punished, suspended for rectification, and made a national notification within the Tuhu car maintenance system.

Tuhu is committed to strengthening the function of the electronic quotation, reminding users to read key information to avoid the recurrence of such situations, expressing sincere apologies to customers, and issuing four "Rest Assured Consumption" measures, and upgrading the "Tuhu Car Care Workshop Service Standard Evaluation System" to protect the rights and interests of consumers.

Specifically, Tuhu will strengthen the reminder of key information such as the brand, price, and model of the electronic quotation, optimize the display interface of the consumer side, upgrade the "authentic traceability" inquiry system of products in the factory, improve the complaint accountability system, and carry out after-sales linkage with local consumer associations.

It is worth noting that Tuhu believes that the content of the three videos circulating on the Internet is inconsistent with the facts, and submitted a complaint application to the video platform on the grounds of "infringement of the right to reputation", requesting the platform to remove the relevant videos. Currently, the series of videos shows "Failed review" and cannot be played.

In an interview with the media, the consumer responded that the "fake" he said did not mean that the accessories of the Lemford brand were fake, but that the actual use of other non-original parts compared to the promised original parts, and believed that the concept of Tuhu car maintenance was secretly replaced.

From this perspective, Tuhu's self-proclaimed "setting standards in the auto service industry" may be overshadowed by the non-compliant operation of some stores.

Second, burn money and expand aggressively, and the franchise model hides hidden dangers

According to public information, Tuhu was established in 2011 and is an online and offline integrated automotive service platform, relying on a customer-centric model and supply chain to provide one-stop automotive services from tire and chassis parts replacement to car maintenance, repair, and car beauty, and will be listed on the Hong Kong Stock Exchange in September 2023.

In addition to Tuhu car maintenance, Alibaba Group and JD.com Group are also laying out the automotive aftermarket business, launching Tmall car maintenance and JD car maintenance respectively. Relevant data show that the number of stores of Tmall car maintenance has exceeded 1,800, and the number of Jingdong car maintenance stores has reached 1,400.

Tuhu said in the prospectus that its main stores are divided into three types, including self-operated Tuhu factory stores, franchised Tuhu factory stores and third-party cooperative stores. As of the end of June 2023, Tuhu's store network includes 161 self-operated stores, 4,968 franchised Tuhu factory stores, and more than 20,000 cooperative stores.

Among them, joining the Tuhu factory store is a strategic focus of Tuhu Car Maintenance, which promotes its efficient expansion through an asset-light model. The number of such stores increased from 1,296 at the end of 2019 to 4,491 at the end of 2022, with a net increase of 3,195 stores in three years, with an average annual growth rate of more than 1,000 new stores.

In 2019, 2020, 2021, 2022 and the first quarter of 2023, Tuhu's revenue was 7.040 billion yuan, 8.753 billion yuan, 11.724 billion yuan, 11.547 billion yuan and 3.265 billion yuan respectively, of which the revenue from franchisees accounted for 55.94%, 62.67%, 69.25%, 75.85% and 80.71% respectively.

It is true that joining the franchise can help Tuhu to maximize operating costs, improve its own efficiency, and seize market share with rapid expansion. However, with the growth of the number of franchised stores, Tuhu is also facing the problem of quality control and control caused by the large store base and wide range of branches.

Before the above-mentioned franchised factory store's "cheating routine" caused a public opinion crisis, Tuhu was deeply involved in the "fake engine oil" controversy in 2018. At that time, some consumers reported that the engine oil of Tuhu Yangche caused the oil pump of their vehicle to be blocked, and they were suspected of using fake engine oil, and pulled up banners in their offline stores to protest against their rights protection.

Some consumers on the Black Cat complaint platform also said that after maintenance, Tuhu has the phenomenon that the exhaust pipe of the car is smoked, the engine is overfilled, the engine is abnormal, and the crankshaft size and tile are all damaged. In addition, many consumers are dissatisfied with the damage caused by the maintenance of the Tuhu car, the unauthorized modification of the terms, and the refusal to perform the contract.

Bedo Finance found that Tuhu was also exposed by franchisees to artificially interfere with site selection, which eventually led to losses. In June 2022, a franchisee of Tuhu Car Maintenance complained to the media that it was "tricked" by an investment manager of Tuhu Car Care in the process of joining, and the other party was suspected of fraud, resulting in the loss of its investment of 1.7 million yuan.

It should be pointed out that in order to quickly build brand awareness, Tuhu has spared no effort in the investment in sales and marketing expenses. During the reporting period, Tuhu spent 1.041 billion yuan, 1.263 billion yuan, 1.681 billion yuan, 1.542 billion yuan and 421 million yuan respectively in this field, spending nearly 6 billion yuan in less than five years.

At present, Tuhu does not have stable profitability for the time being, with losses of 3.428 billion yuan, 3.928 billion yuan, 5.845 billion yuan, 2.138 billion yuan and 279 million yuan respectively during the year/period. According to non-IFRS measures, the company achieved an adjusted profit of 90.849 million yuan in the first quarter of 2023, turning losses into profits.

As an extension of the development of the enterprise, the reputation of the franchise store is related to the overall service and brand image of the enterprise. Tuhu Yangche, which chooses to take the franchise store model as the mainstream operation mode of the brand, needs to further strengthen the strict management of franchise stores while accelerating the layout and win the market with high-quality services.