Car dealers and dealers to be transformed

The operational predicament of car dealers is an important topic that the auto industry can not avoid this year.

The era of hot car brand 4S stores returning to this year is long gone, and more and more new 4S shops need to face the problem is not to make money, but: to prepare for losses for several years?

According to the financial report of the huge automobile trade in the first three quarters of this year, the company’s thousands of dealers have an average profit of only RMB 70,000.

In the face of such a year-end report, how should the 4S store plan its future operations? The incident that reached a subsidized consensus between the BMW China and the BMW dealers that were hot in the industry last week was undoubtedly the most talked about topic at the end of the year.

Although both sides of the incident did not disclose the amount of the final subsidy, it was indeed the first time that dealers and manufacturers sat on a table to solve the problem of profit distribution through negotiation. This unprecedented subsidy negotiation is likely to have a very subtle "butterfly effect" in the future.

Under the background of the "Automobile Brand Sales and Implementation Management Measures", the changes in the relationship between manufacturers and distributors in 2015 may bring about a brand-new ecology in this industry.

Dealer stock pressure pressure BMW dealers staged "reaction"

From the announcement issued by the BMW Group last month, the BMW Group's performance in 2014 was very encouraging.

In October, BMW's global sales increased by 11.1% year-on-year, resuming double-digit growth. Among them, in the largest single market in China, BMW Group's sales in October from 32,858 to 39,512 were up by 20.3% year-on-year. From January to October, BMW Group delivered a total of 375,375 vehicles in the Chinese Market, a year-on-year increase of 18.1%.

Behind this beautiful report card, however, is the enormous inventory pressure carried by many BMW dealers and the serious inversion of car sales prices, which greatly reduced the profitability of the year.

In fact, such high stocks are not just in the BMW family. At the beginning of this month, Jiangsu Automobile Dealing Management Association also released the Investigation Report on the Survival Status of FAW Toyota's Distributors in Jiangsu Province on the official website. The report pointed out that there are many unfair business policies in FAW Toyota, causing the dealers' living conditions to be worrisome.

In addition, according to the financial report for the first three quarters of the huge automaker's fiscal year, the company’s thousands of dealers have an average profit of only 70,000 yuan. In the first three quarters of this year, the operating income of Yaskawa Motor reached 3.833 billion. Although it increased by 8.2% year-on-year, its net profit dropped to 5.84 million yuan, which was a year-on-year decline of nearly 90%. It is estimated that there will be a loss of between 2,000 and 40 million yuan throughout the year.

The China Automobile Circulation Association, which is made up of distributors, also stated that according to the association’s survey, many dealers’ inventory coefficients have exceeded 2 since the beginning of this year, that is, inventory has exceeded two months or more. And to the bank repayment period must be reduced prices, many dealers are at a loss.

So during the Guangzhou Auto Show, some BMW dealers began to gather alliances to raise additional subsidies for the factory. At the same time, the adjustment of sales tasks in the next year has also become the content to be negotiated. Including: According to the 2013 sales revenue of BMW China 200 billion, the distributors will be given 3% of a total of 6 billion yuan in subsidies; the annual sales volume of BMW China must be negotiated with the distributors; no express or The implied method requires falsification of the monthly retail volume; it cannot be bundled with the KPI appraisal, and it is mandatory to increase the number of batches sold or tie-in sales of unsold models; it cannot be bundled with the high-quality batching tasks in the procurement of parts and components.

The collective action of BMW dealers quickly attracted the attention of the German headquarters of BMW. On December 8th, in less than a week, BMW China and BMW dealers reached a consensus on year-end subsidies. Although the final result is less than the 6 billion expected by the dealers, it is conceivable that this is acceptable to both parties. result.

On the same day of December 8, the Auto Circulation Association announced that it had submitted to the Ministry of Industry and Information Technology and the Ministry of Commerce “Report on the Large-scale Loss of Dealership Inventory in the Automobile Circulation Industry”.

On December 10th, at the 2014 Shanghai International Automobile Dealers Summit held in Shanghai, Li Jinyong, general manager of the huge auto trade group made a speech titled “Discussion on Improving the Profitability of the Dealer Group in the New Situation”, which was very “grounded” The development relationship between automobile manufacturers and distributors over the past few decades has been clarified, and the direction of future development of dealers has been pointed out.

Li Jinyong pointed out that the chaotic phenomenon of the current loss-making operation of car dealers is rooted in the manufacturer's "great leap-forward" goal setting. It does not rely on the market, and at the same time is unwilling to bear the consequences. It also passes on errors in target setting. Dealer.

Car dealers, for the first time Maotou, Qi brushed to the car manufacturers.

The sales volume of each car company has been released into the dealer's warehouse

Although the growth rate of the Chinese auto market has slowed down in these two years, the Chinese auto market is still full of opportunities in the eyes of major car companies. In order to seize a higher market share, major auto companies have either actively or passively improved. The annual sales target is to speed up the sales terminal's network layout at the same time.

It is understood that in 2009 China Automotive Technology and Research Center conducted a capacity survey of 20 domestic automaker groups and 10 backbone automotive companies. The survey results showed that the total vehicle production capacity of the country's major 30 automakers was 13.59 million units. The planned annual production capacity reached 31.24 million. In the past two years, a number of new vehicle projects have been added around the country, including Volvo domestic projects, Chery Jaguar Land Rover joint venture projects, and Changan Peugeot Citroen projects. If these projects are added, the domestic automobile production capacity in 2015 will exceed 35 million vehicles.

As a result, the ever-increasing production capacity is bound to enter the circulation, and the pressure on the stocks will be replaced by dealers. "Manufacturers must also complete their sales targets. Their approach is to transfer them to distributors for digestion." A person in the industry who has been in circulation for many years told reporters that in recent years, although some brand manufacturers also have policies on distributors, The adjustments include the increase of rebates and the flexibility of car collection, but the number of tasks per year or monthly in many 4S stores has not been substantially reduced. Under the more severe competition environment, dealers' car lifting pressure and sales pressure are rising. .

Collision of viewpoints

Jinchang Automobile Group Chairman Zhu Zhendong:

"To be a distributor group with the right to speak"

As a veteran BMW dealer, the Jinchang Group's Zhejiang Jinhu and other BMW 4S stores all have impressive sales performance across the country. We see that Jinchang has expanded its territory to more cities. Shaoxing, Ningbo, Jinhua and Jining all have BMW 4S stores opened by Jinchang.

Considering BMW as the closest partner, Zhu Zhendong has always been very clear-minded.

Zhu Zhendong admits that in the current general situation, many 4S stores are already unsustainable. In order to compete for market share and build stores irrespective of consequences, manufacturers are the reason for the sharp decline in dealer profits.

For the fierce market competition, the most direct consequence is that the dealers have sold the car with a price upside down, that is, the price of the new car is lower than the purchase price, and the proportion of some car prices is even higher than 19.5%, which is the price to sell. The purchase price is 19.5% cheaper. This mode of operation, which is a clear violation of basic commercial laws, has long existed in the car and has become a “strange circle” that everyone cannot jump.

“Everyone is losing money to sell cars at all, just to get the end-of-year rebate subsidies given by the manufacturers at the end of the year. This kind of game rules has always been in place, but in the past two years, there has been a growing trend, and some dealers are unable to hold on.”

In Zhu Zhendong's view, dealers are still struggling to persist, nothing more than a "prisoner's dilemma" mentality. "If you want to get the rebate at the end of the year, you will have to sell the car according to the target set by the manufacturer. If you don't achieve the target, then the cost of your next purchase will be at least a few thousand dollars higher than the original price. But if you falsely report sales, Even if you get a rebate, a large backlog of inventory will also weigh on a store."

Moreover, even if dealers withstand the pressure of inventory, if the manufacturers discovered the facts reported by the dealers at the end of the inspection, in addition to penalizing the dealers, it will also lower the overall price of the car. Business is another deadly blow.

In this vicious circle of the auto industry, some people call this kind of investment in losing cars as a "silent cost." When dealers cannot afford such a huge "silent cost", it is time for the dealer system to rebuild.

“The geographical location of the future store will be very important, and the new store will become more and more difficult to do.” Zhu Zhendong analyzed that in this context, the cooperative brand chosen by the distributor also becomes very important. For the Jinchang Group, the BMW brand that is already well-known is obviously the first choice.

Zhu Zhendong revealed that Jinchang Group will open 3 BMW 4S stores next year. The reporter learned that among the 19 current 4S stores of Jinchang Group, there are already 15 BMW and MINI brands. It is not difficult to see that from the overall layout of the Jinchang Group, the BMW brand has become the most important part. The reason why the firepower is concentrated on BMW, the reason for deeper, perhaps precisely to gain more say in the factory.

It is understood that there are currently 15 large-scale BMW dealership groups in China. It is these "big players" who are gradually changing the balance of power between distributors and factories.

Chen Keren, vice president of Yuantong Automobile Group:

"Car enterprises will rebuild their new business cooperation model next year."

For senior automotive industry professionals, Chen Keren has been in the automotive industry for decades, and he is very familiar with the various games between manufacturers and distributors.

Chen Keren said that the "manager-to-subordinate" management approach of dealers has actually been maintained for a long time. In the past when profits were good, dealers could use the proceeds of selling cars to make up for the financial pressure on inventory, and the contradiction was less obvious. However, in the past two years, with each manufacturer increasing sales target uncontrollably each year, the pressure has been continuously passed on to distributors. The direct consequence is that manufacturers put a large amount of products to dealers and become stock, and dealers are trying to solve financial pressure. They had to sell these vehicles at a price lower than the cost. Gradually, they were trapped in a “lost circle” of selling cars at a loss and selling more and more.

According to Chen Keren’s prediction, only about 20% of the 4S stores in Hangzhou this year can achieve profitability, and many of the rest may have huge losses. Some luxury brands have lost as much as a million each month. "In the long run, these stores will soon not persist."

According to Chen Keren’s analysis, to ensure profitability, dealers need to ensure all site and labor cost expenditures through service income such as after-sales maintenance before they can realize small profits in new car sales. However, the current reality is that many 4S stores are now struggling to digest inventory pressure from manufacturers. In order to activate the funds as quickly as possible, they are forced to sell vehicles at a loss to complete the sales tasks assigned by the manufacturers.

In the interview, Chen Keren mentioned a completely new concept: rebuilding the business model.

The so-called re-establishment business model is that both parties in business cooperation need to re-examine the relationship between them. For car companies, dealers are not only Sales Channels, but also important stakeholders, not subordinate to the “subordinate”, but an interdependent “partner” relationship. In the new business model, dealers can achieve equal dialogue and negotiations with manufacturers.

At the same time, dealers also need to rebuild their business models. Moving from car sales to car services will become a way for 4S stores to survive in the future. As Chen Keren said: "Your store's service is good, the brand is your own, not the manufacturer's." Of course, in this process, how to build a service brand will also become a brand new to dealers Question.