Exclusive Dialogue With Song Tao, Deputy Secretary General Of China Automobile Circulation Association: How Can Dealers Save, Reshape And Survive?

The new coronal epidemic at the beginning of 2020 has spread to the whole country, making the decline of China's automobile market in 2018 "worse", and also bringing greater difficulties to the main force in China's automobile circulation field - automobile dealers.

In May, Renault withdrew from Dongfeng Renault, which led to the contradiction of dealers' aftermath problems, making the industry worried about the fate of dealers in the post epidemic era. "Withdrawal" will no longer be a new concept, but the establishment of a reasonable and effective exit mechanism and aftermath mechanism must be put on the agenda as soon as possible.

Of course, in the post epidemic era, in the process of self rescue, vehicle manufacturers and dealers are also reshaping the relationship between new "manufacturers" (vehicle manufacturers and dealers), and triggering more profound thinking inside and outside the industry about the 4S model rooted in China's traditional cars.

"Most dealers have passed the dangerous period when the capital chain was about to be broken at the beginning. Now they are gradually resuming their operations and services, but the situation is not optimistic." Previously, Shen Jinjun, president of China Automobile Circulation Association, said in an exclusive interview with reporters from the 21st Century Economic Report.

Shen Jinjun particularly stressed that "taking this epidemic as an opportunity, the production enterprises should change their production methods and reshape a supply system centered on sales and production."

Indeed, during the epidemic, most vehicle enterprises relaxed the assessment of dealers' KPI indicators. However, when "life or death", the temporary rescue policy can not produce essential changes, especially in the face of the challenges of the new marketing model of production and sales, disintermediation, and direct access to users, the spontaneous change and reform of the traditional car sales model may be the key.

As one dealer group investor said in an interview with a reporter earlier, "All national policies are stable and promoting. The OEMs should also face up to the current situation, lower their goals and expectations, adjust their pace, try to change according to needs, reduce price inversion, and return to the original source. The industry will become more rational and healthy. Perhaps the crisis is also a turning point."

The latest data of "Market Pulse" of China Automobile Circulation Association shows that from January to April 2020, the average inventory coefficient of luxury brands is 1.7, and the average GP1 is - 7.7%; The average stock coefficient of joint venture brand is 1.9, and the average GP1 is - 5.8%; The average stock coefficient of independent brands is 2.4, and the average GP1 is - 9.4%.

"From the data, luxury brands are not prominent, and self owned brands are more difficult. The average inventory in the first four months of this year is between 1.7 and 2.4. Since April, with the gradual increase of manufacturers' production capacity, dealers will face the dual pressure of sales and inventory."

On May 8, Song Tao, Deputy Secretary General of China Automobile Circulation Association, pointed out in an exclusive interview with the 21st Century Economic Report that China's automobile circulation industry needs to further break through at a time when "anxiety" and "burning heart" are intertwined.

In fact, the development of Chinese dealer groups in the background of the times and fierce competition can be divided into three stages:

In the first stage, from 1999 to 2008, dealers completed the development process from single store to group; From the earliest Guangben, Toyota, Mercedes Benz, Audi and BMW 4S stores. In the second stage, from 2009 to 2018, dealers completed the development process from extensive management to refined management, and Guanghui, Zhongsheng Group and other large dealer groups rose. The third stage starts from 2019. The dealers will experience the development process from selling products and services to customer value satisfaction and management.

"The third stage will last for ten years, and the outbreak of the new coronal epidemic at the beginning of 2020 will make all dealers have to face 'how to survive', including dealer groups and individual stores." Song Tao stressed.

On May 28, China Automobile Distribution Association (CADA) will officially release the "Top 100 List of China's Auto Dealer Groups", which is also the list that CADA has released for ten consecutive years.

This list has witnessed the development of China's leading dealer groups over the past decade, their transformation and differentiation, and the pattern and trend of China's automobile circulation.

One list, two reports and three benchmarking systems

21st Century: How is this year's top 100 dealer list different from previous years?

Song Tao: This year, a list, two reports and three benchmarking systems will be released. One list refers to the list of top 100 dealers. The two reports include the Report on the Interpretation of the Characteristics and Evaluation of the Comprehensive Ability of Top 100 Dealers in China in 2020 and the Research Report on the Competitiveness Index of Chinese Automobile Brands in 2020. At the same time, three benchmarking systems will be released, namely, the return on equity benchmarking system, the risk resistance benchmarking system and the operational efficiency benchmarking system.

21st Century: What is the purpose of releasing the list of top 100 dealers every year?

Song Tao: From the perspective of mature foreign markets, the release of dynamic data is very important. How to give some reference and help to the operation of enterprises and the management of dealer groups from the release of industry data is also the most important purpose of the release of the Top 100 dealer list. In addition, let manufacturers, dealers and consumers form good expectations for the industry.

21st Century: What is the guiding significance of CADA's "market pulse" survey data and results for dealers and the automotive market?

Song Tao: In the three sectors of luxury, joint venture and autonomy, compare the main brands together. According to GP1 (the ratio of the difference between the purchase and sales of dealers and the terminal ticket price), GP2 (the ratio of the difference between the purchase and sales including rebates and the terminal ticket price, reflecting the profitability of new car sales), GP3 (the profitability of new car sales including rebates and derivatives), and the brand's sales in the current month The dynamic inventory index reflects the dynamic changes. In fact, the dynamically released content has a great influence on the industry. It can guide the production and marketing plans of OEMs, and can also be used as an auxiliary tool for dealers to sell new cars. OEMs and dealers attach great importance to it.

According to the year-end data of last year, the top 25% of automobile brands in terms of comprehensive competitiveness are in the green light area, the bottom 25% are in the red light area, and the middle part is the yellow light area. For brands in the red light district, the Association will remind dealers to invest cautiously, switch brands, consider brands in the yellow light district or look for brands in the green light district, so as to guide dealers to carry out "close and turn" business integration. For the OEMs, the brands in the red light area should find a way to return to the yellow light area as soon as possible.

21st Century: Does the association have some long-term considerations in promoting the healthy development of dealers?

Song Tao: The Association has always hoped to promote dynamic data benchmarking and report release, so as to promote dealers to improve their refined management level through benchmarking and achieve the goal of healthy development. What is the management level of each dealer group based on the operation and management of automobile brands in red light, yellow light and green light areas? What is a benchmarking dealer group like? Has the enterprise won the market or is it on the verge of bankruptcy? What should the structure of market launch be? What should the product launch structure be? What should the market pricing structure be? How should the brand quality of after-sales service be improved?

These are actually a package of things that need data benchmarking and are effective tools for dealers to break through. The core competitiveness of the Top 100 Conference is data. We have historical data, multi-dimensional data, and trend data of year-on-year and month on month comparison. It is also the long-term service content of the Association to promote the healthy development of dealers through benchmarking.

The differentiation continues to intensify

21st Century: From this year's Top 100 list, is there any obvious differentiation between dealer groups?

Song Tao: In fact, the answer is yes. The differentiation of dealers is really serious. From 2019 to this year, the epidemic stage, some dealers' revenue and sales dropped a lot, ranking backward. But from the data, there are also many dealer groups whose sales and revenue increased. From the perspective of operation management, the development quality of five-star dealers is still very high. From the data of the May Day holiday this year alone, the sales volume and corresponding quality of five-star dealers have exceeded the level of the same period last year.