Author: Weilan
Source: Zhenghe Island (ID: zhenghedao)
1. Hand in hand with many car companies, JD.com, which does not make cars, frequently makes moves
The trillion-dollar track of automobiles has made another big move.
On March 16, at the 2024 high-level forum of the China Electric Vehicle 100 Association, Wang Chuanfu, chairman of BYD, Yu Chengdong, CEO of Huawei Consumer BG, Li Bin, CEO of NIO, and He Xiaopeng, CEO of Xpeng Motors, made a concentrated appearance and spoke.
Surprisingly, JD.com, which seems to have nothing to do with car manufacturing, also appeared at the scene, and the person in charge of JD Automobile also systematically shared JD's layout in the automotive field - JD does not make cars, and will carry out ecological layout around the entire automobile industry chain and the whole life cycle of car owners.
At the meeting, Jingdong also announced that it would invest 500 million yuan in subsidies for co-brands to help cars "trade in the old for the new", and at the same time, it will unite many associations and brands to launch the "tire trade-in" plan from this year's tire festival.
At the same time, on the same day, Jingdong also reached a comprehensive strategic cooperation with BYD, which also aroused the attention and discussion of the entire automobile track.
The fourth on the left is Xu Ran, CEO of Jingdong Group, and the fourth on the right is Wang Chuanfu, chairman and president of BYD Group
One is a TOP Internet manufacturer, and has been deeply cultivated in logistics, digital intelligence, supply chain, e-commerce and other fields for many years, and the other is the "first brother" who is currently in the limelight of China's new energy automobile industry.
The strong alliance between Jingdong and BYD has attracted much attention, in addition, more Jingdong insiders revealed that Xiaomi Auto will also cooperate with Jingdong in terms of vehicles, charging piles, etc.
It can be said that the trillion-dollar track of new energy vehicles is setting off another round of changes.
In fact, if we take a look at the overview of the cooperation agreement between BYD and JD.com:
According to the agreement, based on their respective resource endowments and business advantages, the two parties will fully cooperate in the fields of omni-channel marketing and after-sales service system for passenger vehicles, full-scenario cooperation and customization of special scenarios for commercial vehicles, digital and intelligent supply chain services, centralized procurement of enterprise operating materials and comprehensive services.
You will find that whether it is the cooperation between BYD and JD.com, or the sharing of JD.com at the China Electric Vehicle 100 Conference on March 16, or the news of the cooperation between Xiaomi Auto and JD.com, there are many signals behind it that are worth savoring:
Why did the two giants reach a comprehensive strategic cooperation at this juncture? Why did BYD choose JD.com, and Xiaomi also intended to join JD.com? And with the "frequent shots" of non-car-making forces such as JD.com, how will the new energy vehicle industry develop next?
2. From the "Spring and Autumn Period" to the "Warring States", where are new energy vehicle companies going?
To answer the questions mentioned above, we can start with the current competition pattern and characteristics of the new energy vehicle market.
At present, we need to realize that China's new energy vehicle market is undoubtedly at a critical juncture from the "Spring and Autumn Era" to the "Warring States Period":
According to statistics, five years ago, there were as many as 478 domestic auto brands. However, in 2023, excluding traditional car companies, there are still more than 20 new energy car companies that are still producing and selling, of which the top ten occupy more than 75% of the market share.
This is like that in the Spring and Autumn Period, there were more than 100 vassal states in the land of China, but after more than 360 years of invasion and annexation, in the early Warring States period, in addition to the Seven Heroes of the Warring States, there were more than 10 second-rate vassal states left.
The market pattern has changed, and the competitive characteristics and logic of the entire market have naturally changed, and there are three changes that we can clearly see:
1. The market is down, the brand is up
If 2023 is the initial year of the overall situation of China's new energy vehicle industry from the "Spring and Autumn Period to the Warring States", then don't think that the overall situation in 2023 will be preliminary, and by 2024, all the car companies that are still alive can breathe a sigh of relief.
For example, in the Spring and Autumn Period, the scale of a war was likely to be no more than 10,000 people, while in the Warring States Period, a war ranged from hundreds of thousands to millions.
Car companies must be aware that the exit of a large number of players does not mean that the competition in the market will ease, on the contrary, the competition will only intensify.
Therefore, we see that from the beginning of 2023 to today, the head car companies represented by Tesla and BYD have set off rounds of "price reductions", and in this process, many traditional joint venture brands such as GAC FCA and Beijing Borgward have withdrawn from the Chinese market.
Behind the "price war" is the process of establishing a new order.
At this year's China Electric Vehicle 100 Forum, Wang Chuanfu also mentioned:
"The competition in China's new energy vehicle market is becoming increasingly fierce, and the industry has entered a tragic elimination stage.
On the one hand, China's automobile industry has experienced 70 years of development and has entered a structural adjustment.
On the other hand, China's new energy vehicles have experienced 20 years of cultivation and growth, and have entered a cyclical adjustment stage, and enterprises need to form scale effects and brand advantages as soon as possible. ”
The wheels of the times will always roll forward, in the future, the "price war" is destined to become a normalized means of competition, and the automobile market will become more and more backward compatible, forcing all car companies to "white knife in, red knife out", if car companies for this change, not ready for the corresponding preparations, then it is bound to become the next "princes" to be annexed.
At the same time, in addition to the increasing "involution" in the low-end market competition, the high-end market of new energy vehicles is also ushering in a major reshuffle.
In the past, traditional fuel luxury car brands faced the challenge of "de-glamorization" in the new energy era, while domestic new energy vehicle companies launched a bottom-up brand impact.
For example, while BYD is leading the "price war" in the low-end market, it has launched a million-level "Yangwang" brand, and Geely's Zeekrypton and Huawei's Wenjie are all leading the high-end market of new energy vehicles.
The market is down, the brand is up, this is a challenge that all car companies must face.
2. From "single-point breakthrough" to "unrestricted warfare"
It may be an exaggeration to say that the competition in the automotive industry has entered the "unrestricted war".
However, the competition of the entire industry to this day, if car companies still think that as long as they make a good product or rely on a few technologies beyond the industry to achieve a single breakthrough in the market, the company can usher in a wave of development, this idea is too naïve.
From the Spring and Autumn Period to the Warring States Period, the key to why Qin, Chu, Qi and others became the Seven Heroes is that they carried out more comprehensive changes.
Entering 2024, for car companies, the current market competition is not only about "volume" products, prices, and configurations, but also extends to the business model, management, organization, culture and other levels within the enterprise.
This is the difference between tactics and strategy, the former is tactical, and the latter is strategy.
And tactical failures are not the same as strategic failures.
Tactical failure is only a temporary failure, if you keep improving strategically, even if you encounter tactical failure, as long as you adjust in time, you still have an advantage.
Take the three new car-making forces of "Wei Xiaoli" as an example, why are the three ideal the first and only to achieve profitability? The tactical and strategic logic behind this is actually worth analyzing.
In fact, for car companies, regardless of the cost, it is far from enough to only focus on R&D and products to survive to the end in the "Warring States Era" of the industry.
3. Combining vertical and horizontal, survival is king
In 2015, Ren Zhengfei wrote a paragraph in an internal letter, which is worth thinking about by the helm of the car company.
Ren Zhengfei wrote: "The supply chain of an enterprise is an ecological chain, and the fate of customers, collaborators, suppliers, and manufacturers is in the same boat. ”
Today's automobile track is based on the scale of sales and brand potential energy as the competitive anchor, showing a trend of the strong and the weak eliminating.
Under this trend, car companies have gradually changed the situation of fighting alone in the past, and the vertical and horizontal cooperation between car companies and ecological competition have become the new basic logic of the automotive industry.
You will find that in addition to a few companies with full-stack self-research such as Tesla and BYD, more and more car companies have cooperated with each other:
In July 2023, Volkswagen and Xpeng reached a strategic cooperation, with Volkswagen paying $700 million to become Xpeng's third largest shareholder to jointly develop electric models.
In the same month, Renault-Nissan-Mitsubishi, the world's fourth-largest automotive group, formed a new joint venture with Geely to develop next-generation hybrid technology.
At the end of October, the automotive group Stellantis announced a partnership with Leapmotor in exchange for 1.5 billion euros in exchange for a 20% stake in Leapmotor and overseas sales rights.
In the past, China's "technology for market" joint venture model has reversed the offensive and defensive trend in the new energy vehicle era: multinational companies invest in the market, and local Chinese companies provide products and technologies.
In addition, there are two other possibilities for the integration of car companies in 2023:
One is to build ecological cooperation to a limited extent, such as Mercedes-Benz and BMW jointly building a charging network, and NIO's "battery swap business" has signed cooperation with many industry leaders such as Changan and Geely;
The other is to establish in-depth cooperation with some traditional automakers represented by Huawei's smart car model, so as to rebuild the competitiveness in the new energy era.
In addition, in addition to the vertical and horizontal cooperation between car companies, the vertical and horizontal cooperation between car companies and other leading enterprises that are not in the industry is also promoting the ecological evolution of the industry from a larger scope.
Therefore, we can also see and understand why BYD has reached a comprehensive strategic cooperation with JD.com when it has been called the "first brother" of domestic car companies by many people.
As the new energy vehicle market accelerates into the "Warring States Era", this is an inevitable trend, and in the case of deepening market competition, this trend will accelerate.
3. Why JD.com?
Of course, there may be doubts here:
Why did BYD choose to reach a comprehensive strategic cooperation with JD.com?
In fact, if we look at the specific situation of the cooperation between JD and BYD, we can find more important information.
At the signing meeting, Xu Ran, CEO of JD Group, first introduced the strategy of JD Group and its cooperation in the automotive industry to Wang Chuanfu. Xu Ran said:
JD Group's strategic positioning as a technology and service enterprise based on supply chain and the advantages of digital and intelligent supply chain...... Focusing on the industrial supply chain and pre-production logistics at the production end, brand marketing, after-sales service, and accessories logistics at the circulation end, as well as the centralized procurement of materials, employee health insurance, and technical services in the operation of enterprises, the digital and intelligent operation service of the "research-production-supply-sales-service" supply chain for automobile enterprises and the full life cycle service of "buying-distribution-maintenance-use-exchange" for car owners and users have been initially cultivated and formed, which has effectively promoted the continuous optimization and upgrading of cost, efficiency and experience in the upstream and downstream of the industry.
Immediately afterwards, Wang Chuanfu said:
After years of accumulation and precipitation, Jingdong Group has created a unique digital and intelligent social supply chain infrastructure, which has played an active role in promoting the improvement of enterprise supply chain management, reducing costs and increasing efficiency in the procurement of operating materials and industrial production and manufacturing. BYD hopes to take this strategic signing as an opportunity to ...... Relying on JD.com's advanced supply chain technology and service capabilities, we will work together to promote the transformation and upgrading of China's automobile industry chain and help new energy vehicles accelerate the pace of going overseas.
These two speeches look like official words, but if you really study carefully, combined with the above changes in the competitive landscape and logic of the automotive industry, you will find that the two bigwigs have talked about the challenges that new energy vehicle companies must face and how to go in the next few years.
1. The market should be the brand, both hands should be grasped, and both hands should be hard
In terms of both the market and the brand, car companies with spare power have actually taken action.
Whether Tesla was the first to launch a price war, or BYD implemented a "price reduction" strategy shortly after the Spring Festival this year, but at the same time, after looking up to the U8, it launched the looking up U9 in full swing to fight with a number of luxury car brands in the high-end market.
Wang Chuanfu once said: "The automobile market is not a big fish eating small fish, but a fast fish eating slow fish." ”
So when the car companies themselves have achieved the ultimate in the traditional model and even have the foundation for innovation, how can they be faster?
At the 2024 China Electric Vehicle 100 Forum, the person in charge of Jingdong Automobile said this: "In the future, new energy vehicles will evolve into super-large electrical appliances, and Jingdong Automobile hopes to learn from the experience of Jingdong Electric and do two things, one is to provide brands with new omni-channel sales channels......"
With the gradual consumption of new energy vehicles, you will find that the business logic in the automotive field is interconnected with the field of major appliances.
This is like the former Suning, Gome and Jingdong dispute, traditional dealers and 4S channels are necessary, Jingdong Automobile also has offline channels, but for car companies, they cannot ignore the layout of online channels, especially in the Internet era, online will be destined to become the main position of car companies in the market and brands.
2. Reduce costs and increase efficiency, from single-point optimization to full-chain optimization
In fact, as mentioned above, whether car companies are looking inward - from the "volume" of products, prices, and configurations, to the "volume" business model, management, organization, and culture, or from the outward seeking to integrate vertically and horizontally, until the underlying core is actually four words:
Reduce costs and increase efficiency.
Many people may find that in the past few years, car companies have frantically increased their "anti-corruption" efforts:
At the beginning of 2022, a compliance department was established under the finance department of Li Auto, and the finger was directly pointed at the procurement director of Ideal Auto, a procurement director who owns 4 luxury cars;
Coincidentally, Xiaopeng Motors also launched an anti-corruption storm, after He Xiaopeng repeatedly criticized his company's high cost of parts procurement in public......
Great Wall Motors even wrote in a report on an anti-corruption incident: "If you dare to be greedy for 1 million, the company will investigate even if it costs 10 million." ”
……
Behind the anti-corruption, it is the urgent need for car companies to achieve efficient and precise layout of the industrial chain when facing a "price war", so as to reduce costs and increase efficiency.
So, how to break this situation and successfully reduce costs?
The key is to break the information asymmetry between supply chains and the monopoly of link decision-making, and cultivate digital intelligence capabilities such as sunlight transparency, link visualization, and data traceability within enterprises, so as to achieve full-link optimization.
And this is also the pain point that JD is committed to solving for car companies.
To this end, JD Industry has launched the "Taipu" digital intelligent supply chain solution for car companies: with digital procurement as the entry point, based on the digitalization of goods, procurement, fulfillment and operation, to help industrial partners realize the integration and automatic flow of information flow, business flow, logistics and capital flow;
In addition, JD.com's enterprise business has built an efficient enterprise-level supply chain, providing car companies with one-stop digital procurement solutions for office supplies, employee benefits, marketing materials and other scenarios, thereby helping them reduce their comprehensive procurement costs by more than 15%.
Here is another example, in the traditional automotive industry chain, car companies are accustomed to integrating the industrial chain with the help of Tier 1 suppliers.
Tesla and BYD, on the other hand, have broken this model, and they control the development of Level 1 and Level 2 parts, and even some Level 3 and Level 4 sub-parts, which allows them to eat more profits in the industry.
Tesla and BYD, as the leading enterprises in the first echelon of the industry, can reconstruct the industrial chain model and control the supply chain within their own capabilities when the scale effect is large enough.
But for car companies with relatively small scale or volume, how should they solve this problem?
At this time, JD.com, which has been deeply involved in the supply chain for a long time, can undoubtedly play the role of an integrator, putting the needs of all car manufacturers on the table, and then finding all the corresponding solutions.
With this in mind, Volkswagen Group China signed a strategic cooperation agreement with JD Industries in September 2023 to optimize the Group's MRO (maintenance, repair and operation) material procurement process. Through a digital platform, the partnership will cover the seven Volkswagen Group entities in China, covering the procurement of more than 14,000 MRO materials. In addition, JD Industry has also carried out supply chain cooperation based on digital procurement with many car companies such as Changan, Chery, and Tesla.
And it is worth mentioning that, relying on the supply chain, JD.com's full ecological layout of the automotive industry will also lead and promote the in-depth transformation and transformation of the service ecology of the automotive industry.
For example, JD.com's integration needs can not only help OEMs reduce costs, but also promote the development of outstanding enterprises in the automotive industry chain.
"We have touched the domestic door valve industry belt, which has a lot of high-quality enterprises, but their survival is not necessarily good. The relevant person in charge of Jingdong Industry once said, "Only by giving clear needs to these companies, these companies have the opportunity to better improve their products." ”
At the same time, in addition to cost reduction, how to achieve efficiency increase is also a pain point that must be faced.
Today, many car companies realize that they can't go it alone, and they need to cooperate and build an ecosystem, but realizing it doesn't mean that they can jump out of the original thinking zone.
For example, a car company spent 1 billion yuan for two years in order to build a spare parts management system in China.
What exactly is behind the 1 billion investment?
Sales forecast, market forecast, the forecast of the entire spare parts plus the plan management of spare parts, if you are familiar with people in this field, you will know that there are a lot of quality assurance parts, production parts and maintenance parts, and then go forward is the entire inventory management, transportation management, which involves a lot of capital and energy investment, is a very complex system.
In fact, there are many points behind such a thing:
If you use JD Logistics, then for car companies, a lot of standard parts, a lot of maintenance parts, do you need to do such a strong forecast, warehousing, distribution?
For many dealers and 4S stores, if JD can do 211 on-time delivery, from small to air filters, to large standard parts for enterprise maintenance, JD can achieve on-demand on-time delivery, then is this system of more than 1 billion still necessary?
For car companies, having a large inventory of parts and components has never been a core competitiveness, on the contrary, a large amount of inventory and long-term operation are only in vain to reduce the efficiency of the enterprise and consume the cash flow of the enterprise.
Therefore, it can be seen that in 2021, Volvo will reach a cooperation with JD Logistics, with the help of JD Logistics infrastructure coverage and technical advantages, Volvo has redefined the national after-sales supply chain network, expanded to 8 warehouses in the country on the basis of 4 warehouses in the country, and realized the structural optimization of auto parts inventory costs by building a big data intelligent computing replenishment model.
What is the ideal form of the industrial chain for the future intelligent automotive industry? It is to converge with Apple, which has strong technical and engineering capabilities, and can teach suppliers to build proprietary production lines, while achieving "sediment-level" control over the cost and information of each component.
However, like all good goals, before you can have the ability to reduce costs, you need to invest in a long period of time and thick resources.
And on the road to this ultimate point, who you are traveling with may be more important than the distance you are going.
3. Users are always at the heart of change
Whether it is marketing, brand building, or reducing costs and increasing efficiency, car companies must pay attention to:
Behind all business comes from people, and will eventually return to people themselves.
"The automotive market has reached a tipping point where it has shifted from supply-driven to demand-driven. In the next ten years, new energy vehicles will complete a 'thrilling leap', and the key to maintaining rapid growth is to gain insight into user needs. ”
At the 2024 China Electric Vehicle 100 Conference, the head of JD Auto conveyed JD's insights on the trends in the automotive industry.
At present, with the evolution of the "Warring States Era" in the automotive industry, for most car companies, it is difficult to get out of the normalized "price war", and there is not enough time and energy to open up new ecology on the channel and service side.
As a simple example, today's automotive aftermarket, in fact, is not like you go to JD.com to buy something, buy it at any time and ship it at any time, but it is shipped at the time specified by the manufacturer, and each brand is different.
For example, some brands order one day a week and then arrive four days, and if you encounter a manufacturer who is also short of this part, you may have to wait until the Year of the Monkey.
It may be difficult for many people who have not repaired their own car or have multiple vehicles to perceive this, but for most users, this is a pain point that needs to be solved urgently in the automotive aftermarket.
The return to user value is destined to be an industry trend, and it is also the value that JD wants to bring to the new energy vehicle industry.
"There is no shortage of production capacity and products in the market, and the key to breaking the situation is to understand users, reach users, and satisfy users. ”
In terms of JD.com's JD.com car maintenance business, JD.com has more than 1,500 car maintenance stores across the country, with more than 40,000 cooperative stores, and its service network covers more than 2,800 districts and counties, and it is also accelerating the layout of the sinking market.
It can be said that Jingdong Automobile has opened different models such as sinking large sets and integrated sales and service stores, with JD's own service system, to meet the needs of users, and also make up for the blank market that cannot be reached by new energy vehicle manufacturers.
And it is worth noting that behind Jingdong's car maintenance, Jingdong's attitude towards the entire automotive industry can also be seen: adhere to long-termism and continue to cultivate.
In fact, at this point, why BYD chose JD.com, the idea is also very clear:
JD.com's accelerated layout in the automotive industry is not that JD.com wants to build cars in person, but that JD.com has always helped car companies achieve compliance and anti-corruption, reduce costs and increase efficiency on the basis of the digital and intelligent operation service of the "research-production-supply-sales-service" supply chain based on the car company's side and the "buy-match-maintenance-use-exchange" full life cycle service on the car owner's user side, and promote the high-quality development of the automobile industry chain and supply chain.
4. Conclusion: It is not yet time to raise a glass and celebrate
"The past 2023 is an extraordinary year for the mainland auto industry, a year to create history, after 70 years of development, China's auto industry production and sales exceeded 30 million units for the first time last year, and at the same time jumped to the world's largest car exporter; ”
At the 2024 China Electric Vehicle 100 Forum, Wang Chuanfu expressed such a feeling.
Looking back at the 70 years of development of China's automobile industry, this is a road paved by thorns and flowers.
Today's Chinese auto industry is at its peak and prosperity that it has never seen in the past 70 years, but we are not yet at the moment to raise a glass to celebrate:
There are still a large number of new energy vehicle companies in China that need to be adjusted urgently, and looking at the world, Chinese brands only occupy one place in the world's top ten car sales list.
It can be said that today's Chinese new energy vehicle companies have also come to the no-man's land and deep water area.
Loneliness, confusion, and countless uncertainties.
But just as a generation has a generation's mission, a generation has a generation's responsibility. In the tide of globalization and the great changes of the times, we cannot and cannot stay out of it.
We look forward to more Chinese car companies standing out and shining on the world stage;
At the same time, we also hope that more companies like JD.com will be involved in helping Chinese car companies to reach the top of the world stage.
Resources:
[1]. "The Automobile Market Recreates a JD.com", Financial Mowgli
[2]. "Entering New Energy, Jingdong's Solution", 36 Krypton
[3]. "New Progress!Volvo Cars and JD Logistics' Eight Logistics Centers in China Fully Open Warehouses", JD Logistics
[4]. "Anti-Corruption Knife, Automobile Dark War Supply Chain|PowerOn Deep Krypton", 36Kr Automobile
[5]. "Eliminate More than 300 Car Companies in Five Years, Inventory of Those Disappeared Auto Brands", Titanium Media[6]. "New Energy Vehicle Cruel Knockout, Too Rolled!", China News Weekly
Typography | Shen Wangwang
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