Jia Xinguang: The automotive industry bid farewell to a new era of crazy

A month ago, Huge Group held a relatively unique name of the meeting - "Summary of the first half of the awards and warning education conference", at the meeting on the completion of the task of the year 30 of the 30 units were honored, and broadcast the warning education film " The Right to Out of Control, using economic cases in the group as teaching materials, provided education to all employees against corruption.

Pang Qinghua, chairman of the giant group, said in the speech of the conference that the high-speed growth of the automotive industry is called “crazy years, crazy industries, crazy people”, “What is crazy? It's abnormal, it's crazy. The eyes of a car buyer. Nothing is wrong, selling cars adds money to sell." “That era has no longer existed.” “Every leader and employee must think about a problem: how can we develop, how can we complete the second venture, and what methods can we use to cope with the current situation?”

Also a month ago, Deloitte & Touche released “Investigation Report on China's 2012 Car Dealer Risk Status” (hereinafter referred to as “Report”): Chinese auto dealers are vulnerable to market risk and have a high degree of dependence on new car sales. 92% of revenue comes from new car sales. The mature market's income structure is more balanced: 55% comes from new car sales, 32% from used car sales, and 13% from parts and after-sales services. Chinese car dealers have opportunities in diversifying their income structure and obtaining higher profits, such as only 4% for new cars and 12% for second-hand cars.

The report pointed out: Over 35% of excess capacity has brought great pressure on Chinese distributors. According to preliminary estimates, by the year 2015, the production capacity of the top 30 original equipment manufacturers in China will reach approximately 40 million vehicles, which greatly exceeds the optimistic estimate for car sales. Nearly half (48%) of the surveyed dealers’ inventory turnover days exceeded the current industry benchmark of 45-60 days.

The actual situation may be even worse. Pang Qinghua said: "Inventory has been more than 3 months, and it is still pressing down. The profits have been crushed, and on the consumer side, no one wants to buy a car three months ago."

Dealers complained about manufacturers' pressrooms. Actually, the madness of manufacturers also fueled dealers. Dealers hope that manufacturers will continue to speed up the introduction of more new cars, which makes the market full of old cars that change their face, and the so-called "generational generation" phenomenon. Behind it, it shows that the market life cycle of old products is far from over. Some manufacturers have not been able to keep up with the crazy rhythm and are very hard in the competition. One of the results of the new car's rapid pace of launch is that the dazzling new car will soon become "stars of the last night" and will accumulate in the warehouse.

There are also problems with anti-corruption within the manufacturers and dealers. For example, the case of “Static Country Pines” reveals the chaos of the internal management of state-owned groups and results in the massive loss of state-owned assets. Many car dealerships are private enterprises, but they are also facing urgent issues to strengthen internal management. The gigantic Group Discipline Inspection pointed out: “The violation of regulations by the regulators violates the law and constitutes a threat to the company’s safety”, violates the approval procedures for doing business, does not adequately supervise construction projects, and has internal management loopholes, resulting in an increase in the internal case rate.

Someone predicts that dealers will face reshuffle, which is bound to happen. The ones that have been washed out are definitely dealers who do not have good transformation and internal management confusion.

Therefore, in the face of the new situation, dealers should seriously change their concepts, shift their work focus to service, explore more service areas, and do a good job of after-sales services. Pang Qinghua put forward the slogan of building service-oriented and innovative companies, and the sales and lending model of automobile sales it creates is inspiring for the future development of dealers.