Recently, the author had the honor to interview Mr. Sun Gang, President of the Automobile Dealers Chamber of Commerce of the All-China Federation of Industry and Commerce and Chairman of Shunbaoxing Group (Shanxi Shunbaoxing Investment Management Co., Ltd.), hoping to further understand the current situation and future development of the industry.
Q: What are your plans for the work of the Chamber of Commerce this year? What's the point? The year 2020 will be a great challenge for the domestic and international automobile industry. For example, will it bring you many difficulties in your work this year?
Sun Gang: Industry organization is a platform to serve the industry. The development of the industry needs the efforts of each of us, and everyone is a member of the industry. I believe that most outstanding entrepreneurs are very responsible and have feelings for the industry. They want to accompany the industry for life and want to repay the industry. I think the executive chairman of our chamber of commerce is willing to serve the industry. The original intention of our Chamber of Commerce is to establish an autonomous organization of dealer enterprises. Fully mobilize the enthusiasm of entrepreneurs, give play to everyone's sense of participation and responsibility, and increase the sense of gain of member enterprises.
The Chamber of Commerce is the home base of automobile dealers. Our main job this year is how to help everyone tide over the difficulties when the industry is facing unprecedented pressure and challenges. Every member enterprise is our family, and we want everyone to get family-like help and warm comfort, and on this basis, promote the mature, rational and sustainable development of the industry.
Any crisis is an opportunity, and there are always more ways than difficulties. I believe that as long as we work together in Qi Xin, we will always save the day. Under the black swan incident of epidemic globalization, we hope that through the active cooperation of the Chamber of Commerce and all departments of the All-China Federation of Industry and Commerce, we can provide some grounded services for member units in financing docking and improving the relationship between manufacturers, digital transformation of member units themselves, and refined operation, so as to help everyone improve and cope with difficult times in special times.
Q: You are not only the president of China Auto Dealer, but also the chief helmsman of a dealer group. You are well aware of the impact of this year's epidemic on the industry. Can you tell me something about the actual situation?
Sun Gang: Since 20 18, China's automobile market has been declining for two consecutive years. The total number of 4S shops in China automobile dealers decreased by 14.8% compared with the peak of 20 17. The epidemic situation will accelerate the market reshuffle and improve the industry concentration.
The spread of the COVID-19 epidemic has brought great impact on the global economy and people's lives, and the production and sales scale of China's automobile market has dropped sharply year-on-year.
Automobile circulation industry is a capital-intensive industry. Most car dealers have only about 30% of their own funds, and 70% of their funds rely on bank credit. The vitality of circulation enterprises is fluid and needs high cash flow turnover. Insufficient passenger flow in retail service industry. Although the country has issued a series of policies to promote automobile consumption under the collective appeal of various brothers' business associations, people's income expectations have decreased and consumption motivation is still insufficient. The pressure of capital turnover rate of dealer enterprises has increased obviously, and the risk of capital chain has increased. In the first two months of this year, the luxury brand authorization network has confirmed the closure of 2 1 stores (excluding dealers who are conducting equity transactions). According to the survey of the Chamber of Commerce, since the first quarter, nearly 10% of dealers have the intention of reselling, flipping cards and hosting stores. It is expected that the phenomenon of quitting the network will continue in the first half of this year.
The road we have traveled now and the mature automobile market have all experienced it. In the process of survival of the fittest in market development, the number of American automobile dealers has decreased from about 30,000 in the peak period to more than 1 10,000 at present. The mature process of the automobile market is actually the process of survival of the fittest. Through the natural elimination of the market and gradually entering a reasonable competitive state, the operating state of dealers will tend to be stable and the market will tend to be mature. I think the epidemic will accelerate this process.
Q: How should dealers deal with the uncertainties and challenges in the current internal and external environment? (such as the pressure of survival and development; Changes in the relationship between manufacturers; Enterprise's transformation or business innovation in the face of changes in industry, market and technology; ..... Anything else? )
Sun Gang: In the past ten years, the channel model with 4S stores as the main body formed in the automobile distribution industry is a standardized channel model. The OEM is the maker of product and service standards, and even the large dealer groups in many industries have not played their own scale effect and brand effect.
In the current internal and external environment, dealers should change their positioning and thinking in time and make changes on the basis of insight into industry trends. Investors should stop the extensive expansion in the past and strategically adjust the brand structure and regional layout. At the same time, we should change to refined management, digital organization and differentiated service.
Because they have passively accepted the standards of OEMs for many years, OEMs and distributors are different market players and have different business orientations. Most dealers, especially small and medium-sized dealers, have extensive management and weak ability to resist risks.
At the same time, the outbreak of the epidemic has also stimulated the digital and Internet transformation of automobile dealers in China. Both OEMs and distributors have begun to pay attention to network marketing. Most dealers began to use self-mining tools to build their own private domain traffic pool, realize the closed loop of the whole process business and improve marketing efficiency. In addition to the digitalization of marketing, many dealers have also begun to use digital systems to transform the operation of 4S stores into digitalization, standardization and refinement.
Automobile dealers are a service industry with increasingly fierce competition and homogenization. In the era of stock competition, it is particularly important to build your own differentiated service brand while selling OEM brands and products.
Q: What has the Chamber of Commerce done to improve the business environment of dealers in recent years? What other work will be done this year? Under the current situation, what role should the business association play as a social organization? What role do you play?
Sun Gang: The Chamber of Commerce is the only national trade organization in the automobile distribution service industry of the All-China Federation of Industry and Commerce. Optimizing and improving the business environment of private enterprises is the main responsibility of the Federation of Industry and Commerce, and it is also the main responsibility of our Chamber of Commerce to promote the improvement of the marketing environment of dealers. Every year, the Chamber of Commerce investigates the living conditions of dealers and puts forward suggestions to relevant departments through the proposals of the two sessions. At the same time, closely reflect industry issues and policies and regulations with relevant business authorities. In the past two years, we have undertaken many projects of relevant departments, submitted a proposal report on vertical monopoly legislation in the automobile industry to the Anti-monopoly Bureau of the State Administration of Market Supervision, represented dealers, and participated in the revision of laws and regulations that have great influence on the automobile industry.
This year's epidemic has brought great pressure to the industry. In February, the Chamber of Commerce submitted a report to the All-China Federation of Industry and Commerce/Ministry of Commerce/National Development and Reform Commission, suggesting that necessary policies and measures should be studied and promulgated as soon as possible, and support for phased policies of automobile production, circulation and service industries should be strengthened to promote the stable and healthy development of the automobile market and the whole industrial chain. Including the proposal that subsidies for new energy vehicles will not be reduced in 2020, and the value-added tax rate of used cars sold by circulation enterprises will be reduced from 3% to 2% to 0.5%. On March 3 1, the State Council officially announced three policies on promoting automobile consumption, which fully absorbed the relevant suggestions put forward by industry associations.
In order to solve the financing difficulties of most dealer enterprises, the Chamber of Commerce is providing special loan services for automobile dealer enterprises during the epidemic through financial institutions such as the All-China Federation of Industry and Commerce and China Bank of Communications.
Since last year, the Chamber of Commerce has been calling on automakers to change their production methods, build a supply system based on sales and production, and return to the commercial essence of the circulation industry. The epidemic situation has also brought great challenges to the supply chain system and production rhythm of the main engine plant. The Chamber of Commerce will also pay close attention to the problems and challenges existing in the channel management of various brands, and work with OEMs to build a sustainable channel model.
Q: Can you give an example of communication with OEM?
Sun Gang: During years of communication with the OEM, we have seen different results. Take luxury brands, such as BMW. Since the establishment of our BMW branch on 20 14, communication has been smooth. No matter who the CEO is, the communication channels are always smooth, and the management is pragmatic, and there will be different opinions. But we seek common ground while reserving differences and look ahead, especially during this year's epidemic, management and dealers often have videos. It is an important embodiment of partnership and a pragmatic attitude of German enterprises to deal with practical problems such as capital turnover, inventory pressure and task reduction in a timely and effective manner, with the personal participation of senior managers of manufacturers and the joint efforts of dealers to tide over the difficulties. Therefore, in recent years, BMW's market share and sales volume in China are neck and neck, and most dealers have been able to surpass their peers in profitability.
There are also OEMs with communication difficulties. The management is very arrogant and ignores the voice of dealers for a long time, which also brings great harm to its brand itself. For example, Jaguar Land Rover brand has its own aura when it first entered the China market. It is a first-line luxury brand, but its market share in China has been declining for so many years. While all luxury cars in China are growing, Jaguar Land Rover also has the inertia growth brought by its previous brands, which reached its peak in 20 17, setting a sales record of 146399 vehicles, but its market share decreased by 1.2%. Since 20 18, other luxury brands have kept growing against the trend, but a good brand like Land Rover has not taken the usual path, with a negative growth of more than 20% for two consecutive years, from nearly 7% at the peak of 20 14 to only 3.06% in 20 19, and its sales volume has always been the leader of the second echelon.
Since the outbreak this year, major luxury brands have introduced many support policies to relax the assessment of dealers. Since April, Jaguar Land Rover has resumed the assessment target regardless of the market pressure of dealers, which has caused most dealers to suffer greatly.
If Jaguar Land Rover does not change, it is highly probable that it will be overtaken by Porsche and enter the third echelon in 2020. Porsche sold only 3,898 vehicles less than Land Rover in 20 19 (I wonder if there are any bad reports from Porsche China). This is also the reason why Tata Motors, the controlling shareholder, suffered huge losses and the dealers complained bitterly.
Our Jaguar Land Rover dealer brand branch communicated with its management and found that there were serious problems in the strategy formulation of Jaguar Land Rover from Britain to China. It is very self-centered, without listening to the voice of the first-line distributors in China, while the first-line distributors in China are highly valued by all manufacturers in the world, and there are many problems in strategy formulation, product planning, production, logistics, marketing, management and operation. In addition, there are some illegal acts in the market (many OEMs exist), but the dealers lack some legal awareness, or some or individual dealer groups have harmed the interests of most dealers for short-term benefits. Let's not talk about this, but the Chamber of Commerce, as an industry association and people's mediation committee authorized by the Ministry of Justice, can do something within its power for its members.
"Under the challenge and uncertainty of the current external environment, the role of business associations is even more important. Business association is the bridge and link between the government and enterprises/media, and it is the spokesman of the industry. It is the mission of the business association to accurately and timely reflect the voices of member enterprises, judge the current situation and trend of industry development, communicate with the government and make suggestions, and create a better business environment and decision-making reference for enterprises. When talking about the role of the Chamber of Commerce, President Sun said: "I hope that the Chamber of Commerce can play a bridge role, build a platform for equal dialogue for all parties, promote the healthy and sustainable development of the industry, and provide consumers with more assured services."
At the end of the interview, President Sun said: "For member companies, industry organizations are everyone's home. We welcome every wanderer to go home and work together to contribute to this family. "
This article comes from car home, the author of the car manufacturer, and does not represent car home's position.