Domestic truck company sales are not low profit margin

From the dealer's income, we can also see the profits of the commercial vehicle market. To this end, the "Commercial Automotive News" reporter interviewed a number of truck dealers to understand their operating status and profit.

Foreign giants take profit from the market

According to analysis by industry experts, the pattern of the Chinese automobile market is that international capital accounts for 40% of the capital, occupies 50% of market share, and draws 70% of profits. From these figures, it may not be difficult to see the reasons for the low profits of Chinese auto companies. Joint ventures of various types appear as if they are springing up. The excessive reliance on foreign technology not only gives foreign brands the opportunity to “look and go” but also Disrupted the rhythm of domestic companies conducting independent research and development.

This continues, as the auto market sales continue to increase, will only lead to more profits being imported into the bag by foreign giants. Behind the rapidly growing automotive market, it reveals the dilemma that China's auto industry has not mastered global automotive advanced technology and still maintains low-profit operations.

“Many Chinese auto companies have high sales, but in fact they have very little profit. We, as distributors, are on the front line of sales. We have not made money from selling cars, and manufacturers cannot naturally have high profits. The foreign automobile industry is a technology-intensive industry, and the domestic automobile industry has basically become a labor-intensive industry.I think that like many industries, most of the profits of the automotive industry have been taken away by foreign companies.Many domestic auto companies are Walking along the path of joint ventures with foreign companies, we hope to obtain advanced technology in this way. However, the fact is that truly advanced technology has not learned, but it has paid the dual cost of the market and capital." Henan heavy truck dealer manager Wang told Commercial Automotive News reporter.

Earlier, industry experts were concerned about the “large but not strong” Chinese auto industry. Foreign-funded companies have firmly mastered core technologies, while domestic companies have mainly assumed the role of manufacturers.

Domestic auto manufacturers generally adopt a “market-for-technology” approach to joint ventures and cooperation with foreign companies, but in terms of technology, branding, product manufacturing and marketing networks, the protection of Chinese rights and interests is not sound. This has affected the “market-for-market The implementation effect of technology has also, to a certain extent, reduced the market space of independent brands.

In fact, China paid a heavy price for this. We did get some technology, but in the process of changing technology, we handed over the vast domestic market to foreign companies.

Homogenization competition dilutes profits

After the truck market experienced a major outbreak in 2010, it began to enter a long period of depression, and truck sales profits were repeatedly diluted. The low and low profits of pure car sales also indicate that the truck market has entered the era of low profit.

“The market situation in the past two years is completely different from that before. Before we sold a car, we were able to make profits from various links such as car prices, financial services, insurance, and after-sales service. Now, the price of vehicles has been reduced to the lowest level. Selling cars themselves does not make money at all, and in order to win customers' prices, the brand dealers fight for the financial services and begin to fight for financial services. Even after the profits of financial services are put in, even the profits of the insurance business are allowed to come out. It is said that the price war in the heavy truck market has almost reached the point where dealers are not profitable,” said Zhao Hong, manager of Hongyan dealership, who told Commercial Auto News reporters.

The current fierce competition in the truck market is mainly due to the homogenization of products. The differences between the products introduced by various manufacturers are not significant, and the key assembly even comes from the same manufacturer. In addition to the fact that prices are difficult to attract users, this is also the trigger for price war.

"The reason why manufacturers' profits are so low is that I think there is a big relationship between the homogeneity competition with various manufacturers. Taking the natural gas sector as an example, the key components of heavy truck brands are mostly Weichai engines and Fast transmissions. This is why the products produced by various companies are not very different in terms of quality, performance, and price. This homogenous competition is becoming increasingly fierce and it is easy to eventually evolve into brands. The price war, the profit of selling cars has been diluted again and again, and at the end no one can make any money.” Li Zilong, general manager of Linyi Shengyun Automobile & Trade Co., Ltd., told the “Commercial Automotive News” reporter.

"China's truck companies often have a swarm of bees, and a certain manufacturer has newly developed a new model. In less than six months, various companies in the market will have similar products. This was the case with lightweight vehicles, and now LNG models are also In this way, domestic auto companies are also concentrating on competition in the low-end market, and most of the high-end market is occupied by foreign brands. Even if the low-end market has been smashed, the domestic companies rarely have the initiative to open up the market. From this point of view, domestic companies, like their countrymen, have a strong mentality and lack of ability to explore,” said Zhao.

Talking about the profit gap between car companies at home and abroad, Mr. Zhao cited an example: “I have met a Shanghai Scania dealer. His sales in a year are almost the same as my one-month sales. When I sold 10 times his sales volume and didn't think I made much money, he was very satisfied with his sales and profits. It can be seen that there is a difference in the profits of domestic and foreign truck brands. After-sales service and accessories sales are also much more profitable than me. To shorten the gap with well-known foreign brands, domestic car companies still have a long way to go in terms of market positioning, sales model, and value chain development."

Scania has only 12 distributors in China. Its sales in China are not very large in a year, but users who purchase Scania vehicles almost all engage in high-end logistics.

“Our mainline transportation vehicles are Mercedes-Benz, Mann, Scania and other foreign brands, and do not use domestic heavy trucks, and only use some domestic heavy trucks in the branch transportation. Foreign brands have higher safety and higher failure rate. The attendance rate and on-time rate of the trunk line are very high,” said the person in charge of China Railway Express.

The domestic auto industry can only get rid of homogenous competition and find its own precise positioning in order to improve the status of high sales and low profits.

After the development of the value chain into a profit growth point

Faced with the generally low profits of the industry, companies and distributors have also tried different ways to improve the status quo. "When we participated in the manufacturer's meeting, the manufacturers' CEOs also talked about the current problem of lower profitability of car companies. At that time, they also asked the marketing teacher to specifically address the relevant issues to the dealers, which mentioned that the current car companies are in a concentrated situation. The state of competition in the Red Sea is a problem that many car companies are facing.” Lieutenant told the “Commercial Automotive News” reporter.

According to reports, for the issue of high operating costs and low profits, manufacturers guide dealers to carry out work in two areas. “The first is the development of the market and the digging of other values ​​besides sales vehicles. The profit from selling a car is already very low. We need to look for profit growth points from various aspects such as financial services, after-sales services and maintenance. For example, to promote Shaanxi Auto' The Xingjian''car networking'' service system not only satisfies the needs of users for picking and obtaining other information through the Internet of Things in the future, but also opens up new business growth points. Second, dealers seek transformation and now have a lot of distribution. The company began to carry out logistics business.Because of the advantages of possessing vehicles, after-sales, maintenance and other resources, running freight services at the same time as selling a car has also been followed by many dealers. This is also a relatively successful case where dealers seek to transform themselves. On the other hand, services The station can also seek new profit growth points, for example, by giving certain incentives such as maintaining the vehicle to the service station, etc., and securing the maintenance business of the outbound vehicle, too.” said Xiaolong.