Foreign investment pressures highlight the opportunities in China's auto market

As the most important industrial chain change caused by Beijing Auto's purchase restriction policy, the focus of the domestic auto market has been rapidly tilted to the downstream of the industrial chain in the past few months, and the post-market has become a battleground for the masses of soldiers. With the theme "survival mode and management model urgently need to be upgraded," dealers have gradually become the protagonists of this competition.

In early June, ADP (Automatic Data Processing, Inc.), one of the world's largest providers of business outsourcing solutions, began to launch business promotion in China. The company, which serves seven of the world’s top ten car dealership groups, hopes to take the lead in order to share China’s huge aftermarket profits.

Dealer profit model changes "In developed countries, the sale of vehicles is not profitable, the real profit comes from after-sales service. But Chinese dealers are making money when selling vehicles, but this situation is very It will change soon." ADP Asia Pacific President Mai Baobo said that under the promotion of policies, Chinese distributors are facing a change in the profit model.

Dealer management, mature markets in foreign countries is a standardized industry. Through the management and data analysis of services, parts, finances, information, quality and customer relationships, human-machine integration is achieved, thereby increasing sales efficiency and increasing revenue.

According to the data, ADP dealer service, which was founded in 1972, provides a complete system solution for global automotive marketing. Currently, it serves more than 25,000 manufacturers and distributors in more than 90 countries worldwide. In addition to banks, three major companies in the world have received a 3A credit rating, and the three companies are Johnson & Johnson, Microsoft, and ADP. The ADP's main product, the Autoline system, is a car dealer management system tailored for auto importers, distributors and distribution groups.

In 2006, ADP entered the Chinese market. At present, key customers in China include BMW, Daimler, Mercedes-Benz, and Chrysler. Recently, it has signed cooperation agreements with two domestic auto companies.

Obviously, ADP hopes to use its management system to bring China's huge dealership system into line with the rest of the world, while at the same time allowing it to become the “partner” of distributors in the world's largest market.

According to reports, in South Korea and Japan, the only profitable and profitable area for distributors is after-sales service. Correspondingly, this process of managing the sale of services and parts is very complex and places high demands on management.

In contrast, although domestic distributors have experienced a sustained price war, vehicle sales are still an important part of the profit chain. However, with the introduction of the restriction policy and the intensification of competition, the quality requirements for after-sales services began to increase. “The above factors will force Chinese distributors to start paying attention to the profitability of services and parts sales at retail, so that they can survive today and profit tomorrow.”

For the transformation of the survival mode of Chinese dealers, Su Hui, chairman of the branch of the tangible market of the China Automobile Dealers Association, also pointed out that since domestic automobile production and sales have been under the protection and stimulation of national policies, the domestic car sales market has clearly shown typical The Chinese-style resource market, that is, obtaining authorization, can get a lot of money and get higher returns by getting an important resource like a batch car. However, with the adjustment of policies, especially the intensification of market competition, and the continual intensification of the local government's restrictions on line limits, “the domestic automobile sales market is shifting from a resource-based market to a competitive service market, including sales channels and methods. The car concept, methods, and strategies and countermeasures of manufacturers and distributors will all undergo profound changes."

Su Hui also realized that high technology is constantly penetrating into the automotive aftermarket. "With the development of automotive maintenance network technology, maintenance data, diagnostic data, circuit diagrams, and repair procedures can be obtained online at any time, reducing the differences in access to technical information for maintenance companies of different sizes."

Parts Aftermarket Opportunity The same holds true for the opportunities in China's aftermarket, as well as AlixPartners, a world-renowned business consulting company. In its recently released report, the profitability analysis of Chinese parts suppliers shows that The huge driving force of the market.

Through statistics on the sample of major automobile listed companies, the report pointed out that China's auto parts suppliers continue to maintain the highest level of profitability in the world. In 2010, the average profit rate of China's parts suppliers was about 10%, which was 2.4 percentage points higher than that of vehicle manufacturers, and doubled that of 2008; sales revenue increased by 44% in 2010. It reached about 1.644 trillion yuan.

Among them, the demand from the domestic after-sales market accounted for 14% of the sales revenue of auto parts in China.

“The growth of the aftermarket has provided unique opportunities for auto parts manufacturers and car dealers,” said Wu Jinghui, director of AlixPartners Shanghai office. “Our research and data analysis shows that after-sales market profits are very high. Nearly half of the gross profit for car dealers comes from the aftermarket."

The research report also predicts that China's auto parts suppliers will continue to maintain strong growth in the next few years, especially in the aftermarket. The report pointed out that with the rapid growth of car ownership and aging, the auto parts sales and service industries in China's automotive aftermarket have grown by more than 30% annually.

Similarly, with the attraction of after-sales profits, foreign-funded parts and components companies have been under pressure in the past two years. Taking Delphi of the United States as an example, Delphi focused its attention on China after being hit hard in GM's bankruptcy. Its production capacity and market share in China have risen rapidly. This is also true for competitors along the same lines. In addition, Japan and South Korea parts and components companies are also under the "influenced" to enter the Chinese team this year, hoping to increase the amount of Korean car ownership in the spare parts aftermarket.

Financial data from 60 auto parts companies listed on the Shanghai and Shenzhen stock markets showed that the average net interest rate of China's parts-listed companies in the first quarter of 2011 was 7.01%, which was a decrease of 0.52 percentage points from the same period of last year.

In this regard, analysts pointed out that in addition to the competitive pressure from foreign-funded parts and components companies, the market situation is the main reason. In the case of a strong growth in vehicle sales, domestically distributed parts and components companies have access to market opportunities. However, in the case of a declining market, the reduction in the profit level of parts is also normal. However, the proportion of total profits from the aftermarket will continue to rise.