Since its establishment in 1984, SAIC Volkswagen has gone through 40 years of journey in China's auto market and has become a very important joint venture in the history of China's auto industry. Even so, in the face of the rapid development of new energy and intelligent Chinese automobile market, SAIC Volkswagen also felt the chill. How to throw away the burden and move forward lightly, how to make use of the strengths and avoid the weaknesses in the competition, and how to turn the passive into the active, these are all transformation topics that SAIC Volkswagen is considering.
At a media conference during the 2024 Beijing Auto Show, Jia Jianxu, general manager of SAIC Volkswagen, said quickly, "I'm here to reflect." The result of his reflection is that SAIC Volkswagen's performance in 2023 is "slow", "very slow" and "very slow". In this regard, he put forward a new requirement - "at least catch up, this is very important".
SAIC Volkswagen does not shy away from talking about the difficulties and shortcomings faced by the current joint venture car companies in the transformation process. Although from the perspective of the overall camp of domestic joint venture car companies, SAIC Volkswagen has done a lot. In terms of new energy vehicles, SAIC Volkswagen's ID. series products have achieved initial results in the market, and in the field of fuel vehicles, SAIC Volkswagen still maintains good competitiveness.
But in Jia Jianxu's view, this is not enough. He is thinking about how to bring SAIC Volkswagen back to the forefront of the whole industry, which requires a comprehensive consideration of the company's development, including but not limited to technology layout, product development, supply chain building, distribution service construction, brand operation, and even the establishment of new joint venture relationships.
Judging from the actions of Volkswagen Group in the Chinese market in the past two years, it has made a layout in the field of new energy and intelligence through large-scale investment and shareholding, so as to ensure that it is still in the leading position in the industry in the new era. SAIC Volkswagen, as an important carrier of Volkswagen's business in the Chinese market, will inevitably affect Volkswagen's overall plan. SAIC Volkswagen believes that the initiative and creativity of the joint venture are important, which is the premise for determining whether they can survive in the next two to three years.
Take the autonomy of R&D
Joint ventures such as SAIC Volkswagen are generally under pressure from market share loss in the Chinese market. In the past, SAIC Volkswagen achieved annual sales of more than 2 million units in the Chinese market, but by 2023, SAIC Volkswagen's annual sales have slipped to 1.2 million units. Although this figure ranks high among joint ventures, it is difficult to compete with some Chinese brand automakers in terms of momentum.
Prior to becoming the general manager of SAIC Volkswagen, Jia Jianxu worked in the SAIC group for a long time, and his last career experience was as the general manager of Yanfeng Automotive Trim Systems Co., Ltd., an auto parts company. Therefore, Jia Jianxu has unique insights in the two major fields of auto parts and vehicle development.
Jia Jianxu pointed out that there is a big gap between the new cars developed and put on the market by joint venture OEMs in terms of intelligence and competing products in the Chinese market, and he even called it a "waste of resources". Even if the products of the joint venture car companies are more advantageous in terms of the handling and quality of the models, "these advantages are not well seen by young Chinese consumers".
Yu Jingmin, executive deputy general manager of sales and marketing of SAIC Volkswagen, said that China's auto market has changed and there are also unchanged. SAIC Volkswagen insists on the concept of building good cars, but this means that the cost of paying is higher for car companies. For example, he said, "all the national standards for power batteries are 53, and SAIC Volkswagen is 338, and in the end it must be slow research and development, slow delivery, and high cost."
Yu Jingmin, Executive Vice President of Sales and Marketing of SAIC Volkswagen
Jia Jianxu judged that joint venture car companies will be more difficult in 2023, 2024, and 2025, but by the second half of 2025 and 2026, "the world will be different" as the new products set by joint venture car companies are now launched. He believes that SAIC Volkswagen will definitely be alive by then, and will think about how to live better.
Jia Jianxu's optimistic judgment comes from two aspects: first, SAIC Volkswagen is currently adding products that can meet the needs of the Chinese market in the product spectrum, and second, SAIC Volkswagen's personnel knowledge structure is changing, and it can truly obtain the right to develop its own products through the research and development of the next generation of products.
He further said that in the future, SAIC Volkswagen's product line will consist of one-third pure electric, one-third hybrid and one-third gasoline vehicles. "SAIC Volkswagen does not need to deliberately adjust its product mix to meet the market, because the two thirds add up to 60% of the electric vehicle products. Moreover, SAIC Volkswagen will not be stuck in the national standard to opportunistically make electric vehicle products, but more to meet the consumption scene, so that consumers can repurchase in the Volkswagen, and repurchase is also an advantage of Volkswagen. Jia Jianxu said.
Align partnerships
In the past two years, public opinion in China's auto market has been vocal about traditional car companies, especially joint venture car companies, and at the same time, they are more optimistic about new forces and technology companies. On the one hand, there is a greater "traffic effect" between new forces and technology companies, and on the other hand, there is a technical generation gap between the new energy vehicles of joint venture car companies and the products of Chinese car companies, and this generation gap is about 3-5 years, and joint venture car companies are in a state of catching up.
Jia Jianxu believes that there is no need to be pessimistic about the joint venture model, and the joint venture model will definitely exist in the future, because Volkswagen is inseparable from the Chinese market, and at the same time, SAIC Volkswagen is also exerting its autonomy and continuing to strive for more resource support from the two major shareholders of SAIC Group and Volkswagen.
"We recently held a board meeting, and one of the biggest topics at the meeting was to agree that all hybrid models should be handed over to SAIC Volkswagen, and that SAIC Volkswagen's platform would be used to jointly develop hybrid models for the Chinese market, including PHEVs (plug-in hybrids) and extended range hybrid products. "In other words, SAIC Volkswagen will have extended-range products and long-range PHEVs in the future, and it will adopt an electric vehicle architecture, and a total of four products will be gradually introduced to the market."
From the perspective of multinational car companies, in the past, they only needed to export mature products to the Chinese market, and did not involve much local development in China. However, in the current period of transformation in the automotive industry, joint venture car companies urgently need to break through these inertia, and this heavy responsibility falls on the managers of joint venture car companies.
Jia Jianxu pointed out that one of his major tasks is to convince Volkswagen to reduce the profit assessment of Volkswagen brand bicycles, and at the same time to get them to reverse their inherent engineering thinking and hardware thinking. "We will definitely have more communication costs, which is determined by the capital structure, but we definitely do not complain, but we have to communicate and communicate desperately. Jia Jianxu said.
In today's Chinese auto market, the competition between car companies is not only the finished vehicle, but also the supply chain system hidden behind it. In recent years, BYD and other Chinese car companies have established a supply chain system characterized by "vertical integration", which has brought qualitative changes to the cost control and product development rhythm of enterprises.
Jia Jianxu, who is proficient in supplier business, attaches great importance to the transformation of the automotive supply chain. He said that in December last year, SAIC Volkswagen held a dealer conference and a core supplier conference. Among them, the strategic significance of the core supplier conference is to share all the future product models of SAIC Volkswagen with suppliers, and let strategic suppliers intervene in product development in advance, fundamentally breaking the original supply chain process. In addition, SAIC Volkswagen re-established the cost department in the organizational structure adjustment, which is completely guided by target cost and establishes a development logic with product performance as the core.
Jia Jianxu said that he participated in the supplier conference only three PPT, mainly reflecting the "fast, complete, excellent" three words: suppliers should be "fast", because SAIC Volkswagen has established a 24-month cycle of product development process; at the same time, to be "complete", all models from the perspective of powertrain or from the perspective of products, products to be "excellent", this is the new slogan for all SAIC Volkswagen people.
Enhance the "value of car ownership"
At present, the involution of the domestic new energy vehicle market has intensified, and few companies can make a profit, which has become a major pain point in the development of the industry. In response to this situation, SAIC Volkswagen launched the strategy of "oil and electricity at the same time", that is, the simultaneous development of fuel vehicles and electric vehicles, while ensuring the profitability of fuel vehicles, reducing losses in electric vehicles. SAIC Volkswagen's expectation for the Volkswagen ID.3 is that it will rank among the top 10 in terms of industry sales.
In the first quarter of this year, SAIC Volkswagen sold 265,000 new cars, a year-on-year increase of 11.4%. Among them, sales of new energy vehicles were 28,000 units, a year-on-year increase of 171.3%. The ID. family received orders of more than 10,000 units in March, making it the top EV leader in the joint venture camp. In terms of fuel vehicles, the Passat family sold more than 53,000 units in the first quarter, a year-on-year increase of 74.6%, the Tiguan family sold 37,000 units, a year-on-year increase of 51.6%, and the Lavida family sold 68,000 units in the first quarter.
Although the market and sales bureau is good, how to truly avoid the impact of the price war still needs to be considered by car companies from multiple dimensions. To this end, SAIC Volkswagen will enhance the "value of car ownership" as its differentiated competitive strategy. In March this year, SAIC Volkswagen launched the ID.3 "6% off after three years" user benefits. This benefit aims to break the current industry problem of low residual value of used electric vehicles, and in turn promote consumers' enthusiasm to buy Volkswagen brand electric vehicles.
Yu Jingmin explained that young consumers now like to try new things, and it is a common phenomenon to change cars after three years. The cost of car ownership in three years is the real cost that consumers pay. If the cost of owning a car for 200,000 yuan is the same as that for owning a car for 100,000 yuan, then why don't consumers choose a car for 200,000 yuan? What SAIC Volkswagen has to do is to reduce the cost of owning a car and hold up the price of the car with a higher value of car ownership, instead of blindly following the market trend to reduce prices.
"The car is a durable consumer product, unlike consumer electronics, only the automaker takes the initiative to undertake the obligation to intervene in the second-hand car market in advance, so that consumers can get the latest technology products at the lowest cost of car ownership. Jia Jianxu said, "Today, the attitude of the automotive industry towards the supply chain has not changed, and if it becomes the same as consumer electronics, then the automotive suppliers will definitely not be able to stand it."
Yu Jingmin said that another advantage of SAIC Volkswagen is the user, since the launch of the SAIC Volkswagen app, there have been 14 million users in just three years, of which more than 7 million are car customers. "More and more people are returning to communicate with us online, and now the monthly active users have reached 2.8 million. In the future, SAIC Volkswagen's offline services should be strengthened, and online and offline experiences should be coupled. Product iteration is only the first step of change, and we have a broad path to go in the service field in the future. Yu Jingmin said.