When the market stalls, do new entrants still have a chance? China's microvan market faces such a situation. After experiencing consecutive years of doubling growth under policy stimulus, in 2011, microvan sales eventually settled at 2.2583 million units, a year-on-year decrease of 9.38%. Let’s first look at the top three microvan giants. In 2011, SAIC-GM-Wuling sold 1.21 million microvans, growing by only 5.22%. Due to the integration of Changhe and Hafei, as well as abandoning some low-priced, low-profit models, Changan faced the entire year calmly with sales of 510,000 units, a decline of 29%. Dongfeng小康 then took over most of the economy microvan market vacated by Changan Automobile, achieving an annual growth rate of over 20%, with sales breaking through 360,000 units.
Now let’s turn our attention to the new players in the microvan market. In 2011, FAW Jilin failed to meet its initial expected plan of 150,000 units, with a slight decline in sales; Haima Furuida, which entered the microvan market in April 2009, saw a decline in its 2011 sales of more than 50,000 units; Chery Automobile, which entered the microvan market in January 2009, had its Karry microvan sell only more than 30,000 units in 2011, showing a year-on-year decline; while Shaanxi Auto Tongjia, which entered the microvan field at the beginning of 2010, only managed sales of 10,000 units in 2011.
Clearly, the pressure on the new microvan entrants has increased sharply. On one hand, compared to the depth of channels of industry leaders, newcomers still need time to accumulate. Developing new network channels is even more difficult when market conditions are poor. The dealers' reduced profit expectations for microvans directly lead them to adopt more conservative practices —— waiting and seeing. On the other hand, the products that new entrants bring to the market are mostly high-end long-nose and wide-body microvans that have emerged in recent years. This segment accounts for only about 22% of total microvan sales. Moreover, industry giants like SAIC-GM-Wuling and Changan Automobile are also deeply cultivating this market, making it even harder for new entrants.
However, "Automotive Business Review" believes that this is still a tempting market. On one hand, the huge volume of 2.2583 million units can stimulate every automaker to maintain their interest. On the other hand, SAIC-GM-Wuling, Changan Automobile, and Dongfeng小康 together occupy more than 90% of the entire market share. The highly concentrated market state makes every new entrant believe they have a chance to snatch a portion of the market from the leader, even if it's just 10%, which would still be a considerable number of 200,000 units. BAIC Weyang is precisely such a dream-driven and emerging new force in the microvan market.
BAIC Weyang officially launched sales in July 2011, selling fewer than 100 units that month, but by December, it was already selling close to 2,000 units, with annual sales reaching 10,016 units. In the overall sluggish state of the microvan market, such performance is impressive. Xu Heyi, Chairman of BAIC Group, called it "testing the waters." In 2012, BAIC Weyang set its microvan target at 60,000 units, aiming straight for the leading position among new microvan entrants. For new microvan entrants, rapid breakthroughs in product are not realistic; now they still need to start from the basics to seize opportunities. Zhang Chaoxiang, Director of the Microcar Department of Beijing Automotive Sales Headquarters, expressed this view in an interview with "Automotive Business Review."
The foundation of microvans consists of three aspects: product quality, brand awareness, and the construction of sales channels and service systems. In 2011, quality control was almost a must-discuss topic for all microvan companies. To strictly control product quality, BAIC Weyang did not launch its new car until July after announcing the BAIC Weyang brand in March 2011. Brand awareness is the weakest link for new microvan entrants. During the brand-building process, new microvan entrants also frequently employed various tactics. Unlike SAIC-GM-Wuling, Changan Automobile, and Dongfeng小康 clustering around CCTV Channel 5 Sports Channel, new microvan entrants focused more on CCTV Channel 7 Agriculture Channel. Chery's Karry microvan sponsored the programs "Autumn Harvest Action" and "Entrepreneurship and Wealth Role Models," while BAIC Weyang became an exclusive strategic partner of CCTV Channel 7, actively delving into second- and third-tier markets and key microvan sales areas through events like "Spring Plowing Action Across China" and "Entrepreneurship and Wealth Role Models." Moreover, as a newcomer to the microvan market, BAIC Weyang chose multiple means to enhance its brand awareness. In 2011, it selected four trains following the "three verticals and one horizontal" route for full vehicle embedded advertisements, even printing the BAIC Weyang logo on tablecloths inside the train compartments, forming a carpet-style coverage. "We selected trains starting with T and K, stopping at every station, where migrant workers relatively concentrate," said Zhang Chaoxiang.
In the past year, BAIC Weyang also participated in the "Han Hong Love BAC Sunflower Tibet Home Public Welfare Journey" sponsored by the BAC Group. Not only did BAIC Weyang become the first microvan to drive onto Tiananmen Square, but it also underwent testing during the long journey from Beijing to Tibet, enhancing brand awareness while proving product quality. Meanwhile, it did not abandon leveraging group strength. In all promotional brochures of 4S stores under all BAC joint ventures across the country, BAIC Weyang hitched a ride, being listed alongside Beijing Benz and Beijing Hyundai as parallel products, demonstrating on one hand that its products have the same quality assurance as joint venture products, and on the other highlighting the brand appeal of the BAC Group.
Sales channels and service systems will be the guarantee for new entrants to ultimately break out. To achieve its 2012 sales target of ensuring 160,000 units and striving for 180,000 units, FAW Jilin strengthened regional, channel, and service efforts. Even Dongfeng小康, ranked third, utilized a high rebate policy nationwide to aggressively expand channels, thereby rapidly increasing sales. From the outset, Haima Furuida formulated a three-step strategy of "Seed Plan," "Extensive Planting Plan," and "Deep Cultivation Plan," sinking outlets to townships based on opening up key regional markets. To solidify the dealer base, BAIC Weyang developed a unique "1+N+X" model, establishing one standard image store in the central city, developing N dealership outlets in surrounding prefecture-level cities, and further expanding X secondary outlets in county-level cities through these prefecture-level city dealerships.
In 2011, BAIC Weyang signed contracts with 130 dealers, with 80 actually shipping vehicles. Among them were five Class A dealers and six "1+N+X" model dealers located in Baoding, Hunan, Sichuan, Xi'an, Liaoning, and Xinjiang (under construction). Even in Qinzhou, Guangxi, which is SAIC-GM-Wuling's stronghold, there was a staunch BAIC Weyang dealer whose sales performance far exceeded initial expectations. Though the results were commendable, the hardships could only be truly appreciated by those who experienced them. "An investment of about 5 to 6 million yuan is required for a Class A dealership, and the market's sluggishness has made dealers extremely cautious about investing," said Zhang Chaoxiang. In March 2011, when the BAIC Weyang brand was just announced, there were 18 potential dealers, but only eight eventually signed contracts. To attract dealers, BAIC Weyang increased the rebate for Class A dealerships from the initial 1.65 million yuan to 3.05 million yuan, with other levels correspondingly adjusted, and half of the rebate paid out in one lump sum after construction, with the remaining part gradually returned according to sales and performance. "Automotive Business Review" learned that under the incentive policies, the majority of BAIC Weyang dealers made profits in 2011.
Of course, the service system is equally important. Initially, new entrants in the industry rely heavily on word-of-mouth from users as the best promotional tool. Zhang Chaoxiang told "Automotive Business Review" that as newcomers, they must ensure 100% resolution of user issues. Before the Spring Festival of 2012, in the northwest market, a BAIC Weyang customer drove directly off a mountain into terraced fields. Although the traffic department attributed the accident to driver fatigue, BAIC Weyang staff still rushed to the scene to inspect the vehicle. Due to severe damage, the user would need to pay nearly 30,000 yuan for repairs. After internal discussions, to protect the user's interests, BAIC Weyang eventually resold the customer a new car at half price to increase loyalty to their brand. In 2012, BAIC Weyang plans to establish seven spare parts warehouses nationwide to ensure delivery within 24 hours. This is work that the company must undertake.
"Automotive Business Review" believes that microvan new forces like BAIC Weyang aspiring to rise prominently must make greater efforts to challenge industry leaders, but the road is not blocked, making it the best place to showcase their wisdom and effort. Thus, after setting a 2012 sales target of 60,000 units, Dong Haiyang, Vice General Manager of BAIC Shareholding, toasted a drink to Zhang Chaoxiang, giving the marketing expert his new task: "We aim for six and strive for seven."
Hubei Jiangnan Dongfeng Special Purpose Vehicles Co., Ltd. is a designated production factory by the National Development and Reform Commission, the only fire truck production qualification manufacturer in the dedicated automobile capital approved by the Ministry of Public Security Fire Bureau, and a supporting modification plant of Dongfeng Motor Corporation. Its main products include fire trucks, tow trucks, aerial work platforms, wing-opening box-type transport vehicles, water sprinklers, fuel tankers, chemical liquid transport vehicles, flatbed transport vehicles, mobile power vehicles, garbage trucks, etc., numbering hundreds of varieties. All models have been included in the national announcement directory, obtained ISO9001-2000 quality management system certification, and passed CCC certification. Phone: 18671079399, 0710-3328649, 3328629 (fax), website: http://www.hbjndf.com, E-mail: [email protected].
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