Seeing Wei Zhi, My View of the Commercial Vehicle Industry

From July 15, 1953, FAW built the plant to 2013, China's auto industry has gone through "from scratch" and "from small to large" 60 years of wind and rain.

On July 14, 1956, the first car produced and manufactured by the Chinese people, the "Liberation" brand truck, was put on the line from the Changchun FAW assembly line. The Chinese auto industry started from then on. Commercial vehicles, which are an important part of the automobile industry, have opened the doors to independent development of the Chinese auto industry and witnessed the 60-year history of the automotive industry.

In 2012, the production and sales of commercial vehicles completed 3.8471 million vehicles and 38.121 million vehicles respectively, starting from 0 to nearly 4 million vehicles. The achievements of the commercial vehicle industry over the past 60 years are unquestionable. While affirming our achievements, we must also see the rapid development of the commercial vehicle industry and even the entire automotive industry. There are also urgent problems to be resolved.

Many experts in the automotive industry have once emphatically pointed out that the automotive industry has the problems of lack of innovation capacity, lack of core technologies, unsound industrial chain development, and weak industrial base. In this article, the problem of foresightedness and largeness has not been mentioned for the time being. The author hopes to reflect the problems faced by the current commercial vehicle industry by “seeing the big picture” through interviews with many participants in the commercial vehicle industry.

About "Manufacturers and Distributors"

Heavy truck dealers: Before July, we were puzzled as to whether the heavy vehicle IV emission standards would be implemented and implemented on schedule. It was difficult to plan sales after July. In this regard, manufacturers do not have clear news. However, in the face of the possibility that the State III car will not be on the market after July 1st, manufacturers have given guidance to the State III vehicle in advance. Advancement of households may be able to improve the current inventory of State III vehicles, but sales of the vehicles already in use are also facing difficulties. Local users may have little influence, but foreign users are not willing to choose vehicles from different locations. Therefore, the vehicles that have already appeared in the home seem to have solved the current inventory problem, which in fact has brought greater pressure on sales. We have asked whether the manufacturers will help us to digest the vehicles that have failed to be sold. The manufacturers did not give any response. This also means that if these vehicles that are already in the household are not sold, the dealers will bear the losses themselves.

For the dealer's stock car, manufacturers have not been able to do "words and deeds." We often reserve some good-selling models ahead of time based on our forecasts of the market, but there are always deviations from the forecasts. The manufacturers had promised to help us to allocate those inventory vehicles with unsatisfactory sales conditions in the network of the entire country. However, they have often evolved into our own compensation costs. The manufacturers are no longer helping us adjust. Therefore, inventory vehicles are usually our own way to digest.

Reporter’s comment: The situation mentioned by the above distributors may only reflect one side of the relationship between manufacturers and distributors, and cannot explain all the problems. However, in the relationship between the manufacturers and distributors, if the manufacturers are likened to general strategists, then the dealers are soldiers who are struggling with each other. Both rely on each other and are indispensable. How to layout the sales network, how to make the sales network more deeply extended and more extensive radiation become the key to the sales of the manufacturers. The home appliance industry has already developed into an era of “channels are king”. It is no longer news that channel companies are making manufacturers and competing with manufacturers for profits. Although the automotive industry is far from reaching this level, the problem of handling the relationship with distributors and solving the problem of profit distribution should be valued by manufacturers.

About "Sales and Profits"

Heavy truck dealers: In 2011, our total sales volume was 1,000 vehicles. In 2012, the manufacturers gave us the guiding goal of 1,100 vehicles. According to the market situation where the sales of our local brands have generally declined by 30%, we have set ourselves a target of 900 vehicles. Ultimately, our sales performance for the entire year of 2012 only reached our own set of necessary goals. Assuming that we can achieve the goal of 1,100 vehicles guided by manufacturers in 2012, our target in 2013 may be 1200 vehicles or even 1,300 vehicles. This is the case for our distributors, and for the entire manufacturer, so we can see a straight-up “Chinese-style goal” everywhere in the industry.

For some brand distributors, the year-end can not achieve sales goals, will eventually affect the manufacturers to the dealer's year-end rebates, dealers have to influence preferential policies, so there will be distributors to achieve the goal to give up profits for sales . The same is true for manufacturers, especially state-owned enterprises. Almost none of the state-owned enterprise policy makers will reduce sales on the basis of last year's sales when they set targets, and reduce profits to ensure that sales growth becomes an inevitable choice. Sales volume should ultimately be determined by market demand, and market demand cannot always go upwards. Regardless of the pursuit of profit sales, it will hurt dealers and manufacturers in the long run.

Reporter’s comment: The automotive industry’s pursuit of “quantity” seems to have existed from the beginning: In 1992, China’s annual automobile production exceeded 1 million; in 2000, China’s annual automobile production exceeded 2 million; in 2002, China’s annual automobile output exceeded 300. 10,000 vehicles; In 2006, China's auto production reached 7.28 million vehicles, making it the third largest company in the world... These data were listed in the 60-year event of commercial vehicles.

Production, sales volume, year-on-year ratio, and ring-to-gage ratio have become the main criteria for measuring the development of the auto industry, and how profits are only discussed after closed doors. After all, profit is the driving force behind technological innovation and enterprise development. After measuring the scale with quantity, it should also pay more attention to profits.

About "sales and after sales"

Truck dealers: We also operate service stations while selling vehicles. The operation of service stations is largely not for making money, but for maintaining customers. Service station revenue mainly has three aspects: First, the manufacturer's after-sales service payment; Second, the profit of sales of accessories; Third, the maintenance of social vehicle income. Among them, the manufacturer's after-sales service payment is the main part. Some brands that pay attention to after-sales service will promptly hand over the reimbursement passed by the audit to the dealers; some brands do not attach importance to after-sales service, or even do not want the service station to fulfill the obligation of free maintenance within the warranty period. This point reflects the specific behavior of the manufacturers is more and more rigorous review of the after-sales service payment, and even deducted and delayed the payment to the dealer. As a result, vehicle service is difficult to implement. For example, the user of a brand truck we sold called the manufacturer's 400 service hotline to request rescue services. The manufacturer stated that it would arrange a service station for rescue. In fact, the manufacturer did not arrange for service station rescue. The user chooses to contact us directly for long time waiting for help. Based on the actual needs of the user and the consideration of maintaining the relationship with the customer, we can only arrange the rescue of the service station. However, it is hard to say whether the costs involved will be recognized by the manufacturers and refunded.

The reporter said: In the modern business philosophy, after-sales service is part of sales and is the beginning of the next sale. Good after-sales service is an effective means to maintain customer relationships and foster customer loyalty. The cost of maintaining a loyal user is much lower than that of developing a new user. This shows the importance of after-sales service. China's auto industry has entered its 60th year, but the auto three-package policy was only introduced on January 15, 2013, far behind foreign countries. At present, after-sales service has attracted the attention of many manufacturers, and various service slogans are repeated. However, how to put the slogan into every service requires more efforts.

About "Reference and Shanzhai"

Parts companies: Compared with the entire vehicle market, the confusion in the parts market is beyond the imagination of many in the industry. Taking the filter market as an example, some people in the industry have done preliminary statistics. Nearly 60% of the products in the filter aftermarket have been counterfeited, and even survey data from foreign companies show that the proportion of counterfeit products has reached 90%. the above. In the host matching market, the heavy-duty vehicle matching market is basically occupied by foreign brands, and the growing independent brands can only begin to break through from the light-duty vehicle market.

Not only is the filter industry, our entire automotive industry lags behind foreign countries. Therefore, learning and drawing on foreign technology and experience is inevitable. However, the reference is not a counterfeit, nor is it a copycat. You can't label your own inferior products with the labels of brand-name products as "snapshots." In the current parts and components market, foreign brands hold high-end markets, and low-end markets are flooded with counterfeit and inferior products produced by various manufacturers, while self-owned brands are struggling under the dual influence of foreign brands and counterfeit and inferior products.

Reporter’s comment: Some people once said: “Any brand in the world can find imitation products in China”. This kind of exhortation tells us the reality of our lack of innovation consciousness and lack of innovation ability. In all walks of life, the automotive industry is no exception, and parts and components industry is even worse. With regard to foreign technology and experience, it can only solve temporary difficulties and can not fundamentally promote the development of China's auto industry. It is worthwhile to learn from the past, but insisting on independent innovation and building an independent brand is the revitalization of China's auto industry.

About "the level of industry barriers"

Bus manufacturer: school bus as a former industry hot spot seems to have reduced the popularity, and less attention has been paid to the society. The promotion of school bus products that meet the requirements of the new national standard is also difficult. In July last year, the Ministry of Industry and Information Technology released the "Provisional Management Rules for Private School Bus Production Enterprises and Product Access." Compared with the first draft, the "Rules" further reduced the access threshold for the special school bus market and eliminated the requirement for the company's production scale in the first draft. The quality of school buses is related to the safety of students' lives and the reduction of admission standards, so that more SMEs can enter the school bus market and give substandard products the opportunity to enter the market. Although the threshold reduction will not affect the school bus market structure, the products produced by large passenger car companies are still the mainstream of the market. However, the current demand for school buses is mainly concentrated in second and third-tier cities and rural areas. Although these areas have demand, they lack the funds to purchase regular school buses. Therefore, many school buses produced by SMEs that do not meet the requirements of the new national standard have a wide market. In addition to school buses, passenger vehicles and even the bus market also have such problems.

Passenger transport companies: There are "black cars" parked around many subway stations outside Beijing's Wuhuan Road. Taxi cabs are basically extinct in these places. Taxi cabs not only fail to attract guests in these places, but may also be subject to personal threats. Similar to taxis, passenger transport companies have also encountered "black car" competition, the most serious of which is tourism passenger transport enterprises. Taking Beijing as an example, passenger transport vehicles with formal tourism passenger qualifications are almost non-existent in the “one-day tour” market in Beijing's suburbs. Unqualified “black cars” offer lower prices, more frequent departure times and more frequent trips, all of which are of great attraction to tourists. Constrained by costs, regulations, etc., formal tourism passenger transport companies have no advantage in front of the "black car." In addition to personal vehicles, the "black car" also has a bus rental company vehicle. In 2011, the "Circular on Promoting the Healthy Development of the Automobile Leasing Industry" issued by the Ministry of Transport pointed out that car leasing companies may not engage in road passenger and cargo transportation operations without permission. In principle, car rental companies and passenger transport companies do not involve overlapping businesses. However, in fact, there are a large number of car rental companies engaged in road transport activities, and take advantage of their own low threshold to seize the market share. Therefore, irrespective of individual vehicles, only for bus rental companies, even if there is a division of related business scope and industry barriers, it is still virtually useless.

Reporter remarks: One is that the industry's threshold is too low, and one is to ignore the existence of thresholds. In short, the industry threshold is in a state of virtual reality. The threshold for regulating and restricting market participants did not play its due role, and “bad money drives out good money” has become a frequently performed drama in the commercial vehicle market. The space for good products and services has been squeezed and difficult, and good market environment and order have been damaged by inferior products and services. This is not only a problem faced by the passenger car industry. The automotive industry, especially the parts and components market, is also widespread. The author believes that the establishment of a reasonable industry entry threshold is the first step in regulating the market order and creating a level playing field.

About "Policy Formulation and Implementation"

Bus industry experts: In my opinion, the formulation of China's automobile industry policy has several characteristics: lagging, repetitive, and non-concurrent treatment of specimens.

The most obvious case of policy formulation lags behind is the school bus. After several consecutive school bus accidents have been reported by the media, the school bus problem has attracted attention from all walks of life. Since then, the "School Safety Management Regulations" was approved by the State Council Executive Conference in March 2012, and in April 2012, a national school bus safety standard was issued. In fact, the school bus as a social problem existed before the school bus accident in Qingyang, Gansu, but it failed to attract attention. After school bus accidents, the government has successively formulated relevant safety policies and standards. This is not only an increasingly strong expression of the current social and humanistic atmosphere, but also reflects the fact that the formulation of national policies lags far behind social needs.

It is also a problem that often exists in the automotive industry policy that it is not possible to treat both the symptoms and the root causes. The outstanding performance is the cancellation of sleeper buses. As with the school bus problem, sleeper buses have attracted attention because of frequent accidents and heavy casualties. In consideration of the safety of passenger transport, the government has made a decision to prohibit the production and sale of sleeper buses. In my opinion, the root cause of the frequent occurrence of passenger transport accidents is the problem of passenger transport safety management. The removal of sleeper buses, which appears to be "forever eliminating the troubles," has not finally solved the problem. Passenger transport safety management has not improved. Even without sleeper buses, ordinary passenger cars may still experience safety accidents.

"Repetition" should not appear above the national policy formulation. It has undergone two delays before and after implementation of heavy-duty vehicle IV emissions that are widely concerned by the commercial vehicle industry. In July, there will be no clear information on how to implement the National IV follow-up. . Such repeated efforts will not only undermine the authority of the policy, but also shake the confidence of the industry in implementing emission escalation.

The reporter said: Compared with social needs, the formulation of policies has lagged behind, and the formulation and implementation of policies are even more separated from each other. When State III was implemented for five years and the industry was discussing how to implement State IV, the reporter learned that there are still many places selling State II vehicles. The dealers provided the State II license for the State II through special channels and continued to sell vehicles with severely lagging emission standards. The implementation of the emission standard upgrade policy is evident. Policies are not overwhelming. The introduction of the policy is only the first step in solving the problem. The implementation of the policy is the key to solving the problem.

About "open up new markets and regional protection"

Bus company regional manager: For any company, opening up new markets is not an easy task. However, if you have a product with excellent quality and advanced technology, it is equivalent to having a “stepping stone” to open up new markets. For the bus industry, an industry that uses relationship marketing as its primary marketing tool, it is not enough to have these.

I came to the province where I live today as a regional manager three years ago. Our company’s market share has expanded over the past three years, but its market share is still small. The reason is simple. There is a bus manufacturer in the province. Local 90% of the market share is occupied by local brands, and the combined market share of other brands is less than 10%. The local government encourages bus companies and passenger transport companies to purchase locally-branded passenger vehicles for reasons of fiscal revenue and support for local companies. And if you choose a local brand, the government will give 20% or even 30% of financial support. Coupled with the base camp near local bus companies, after-sales service and parts supply can better meet the needs of users. As a result, our foreign passenger transport companies have almost no chance of entering the local market. The only market share is also obtained when our competitive products are just short of each other. Of course, we also have advantages in the location of our company. For the entire passenger car market, regional protectionism is widespread.

Reporter’s comment: Compared with the relatively diversified marketing mode of the truck industry, the marketing mode of the bus is a lot simpler. When the "distribution" is widely used in all walks of life, the marketing mode of the bus market is still dominated by "direct sales." It is still the mainstream to set up regional managers in various regions. With the limitations of marketing methods and the widespread existence of regional protectionism, it seems difficult for bus manufacturers to seek a break. It is not easy to break local protectionism. Therefore, seeking marketing innovation may be an icebreaker for bus companies to open up markets.

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