Manufacturers severely punish price pressure behind distributors' markups

Difficult moments: severe punishment or subsidies?

Industry sources said that car companies should identify the weaknesses of dealers, learn from foreign experience, and improve the corresponding business policy. At the end of June, the news of two car manufacturers is quite intriguing --- FAW-Volkswagen has published to its dealers "About the prohibition of "Public branded products to increase sales notice," said that it will severely punish the behavior of dealers to increase sales; a joint venture pulled out 3.4 billion as a dealer promotion subsidies.

Although one is severely punished and one is a subsidy, all of them reflect the further deterioration of the sales situation in the terminal market. The dealers in the “sandwich layer” are enemies, and the inventory pressure needs to be relieved.

“I went to the auto market in all parts of the country and the dealers generally reflected: June is not May, May is not April, and April is worse than March.” Although in May, automobile production and sales increased by as much as 16% year-on-year, Luo Lei, deputy secretary-general of the China Automobile Dealers Association, pointed out that "automotive manufacturers' pressure storage has achieved sales growth," and dealers are under great pressure to survive.

However, people in the industry said that regardless of severe punishment or subsidies, these policies are palliatives, car companies should find the weaknesses of dealers, learn from foreign experience, improve the corresponding business policy.

After severely punishing the price increase, the inventory pressure is difficult to "After verification, the dealer must return the user double the amount of funds within 3 working days. If you refuse to return, FAW-Volkswagen will cancel the full assessment commission of the quarterly dealers," recent FAW-Volkswagen issued the "Notice on prohibiting sales of mass-brand products", saying that it will be implemented on June 22, 2012.

For many auto industry professionals, choosing this node to punish FAW-Volkswagen, which severely punishes the increase in prices, is worth pursuing. A Dongfeng Nissan regional source said that in fact, many cities nowadays, FAW-Volkswagen quite tight models such as Sagitar, golf have a certain inventory, both have preferential, but other dealers still take the increase in profits and not pay The manufacturers of prescriptions are quite a headache. Taking such measures, “Let the original mark-up dealers also give up the price increase. In other words, the discounts obtained by consumers will increase and the sales of FAW-Volkswagen will also increase.”

FAW-Volkswagen's move, on the one hand, as the automotive industry expert Su Hui said is a marketing behavior, "when others have cut prices, FAW-Volkswagen in this way prove to consumers that they will not lower prices to prove the quality of the products "From another level, it reflects that in the first half of this year, the auto market was in a sluggish state. Despite the fact that the sales figures of North and South China Volkswagen are still bright, the pressure on manufacturers to bear the full-year sales target is still not small.

"The best FAW-Volkswagen has to sell in disguised form, and the whole automobile market can be conceived by the inventories." Sun Shiqing, an automotive analyst, said. Affected by the entire economic environment, this year's auto market is weak, and auto manufacturers have generally increased their annual sales tasks this year. Nowadays, under the general environment of continuous downturn in the market, manufacturers have to transfer sales pressure to dealers in order to complete their half-year performance goals. On the other hand, in the face of high pressure from the upstream manufacturers and weak downstream consumption, the inventory pressure of dealers caught in the middle of the company is increasing. Li Zhenda, sales manager of Guangzhou Chang'an Ford Xinfu Store, said that "from the current market perspective, the inventory of nearly two months has given us a lot of pressure on the flow of funds, inventory costs and the introduction of new models."

Some manufacturers of "blood" dealer stocks have become a pressure on the dealer's "last straw" trend, dealers have to carry out sales cuts to digest and activate funds. However, continuous price reductions have caused consumers to hold a coin and wait and see. Compared with the hot summer climate, car dealers have already entered the "winter"; in the face of the reality of the market downturn, the host plant and distributors of the malformation The unequal relationship is reverting to the state of "dependency".

Nandu reporter learned that recently, some OEMs have come up with measures or even subsidies to give distributors "blood". A person in charge of the Dongfeng Nissan North China Region told Nandu reporters, "We are constantly adjusting our policy toward distributors. At present, the concessions have been expanded, dealers have relatively little profits, and we have added some sales incentives to subsidize the policies.” Shen Wansong, general manager of Shanghai Volkswagen South China Distribution Center, also told Southern Reporters that Shanghai Volkswagen’s The market was also hot during the previous years.

The above-mentioned car manufacturers' dealers' "blood-enrichment" behavior, in the automotive industry commentator Zhang Zhiyong (microblogging) view, subsidized dealers to a certain extent is to prevent the fracture of the dealer capital chain, to ensure the stability of sales channels in the long-term To ensure brand market competitiveness, "stabilize the dealer system within the channel." Luo Lei, deputy secretary-general of the Auto Circulation Association, also showed similar views when interviewed by Southern Reporters. He chose to subsidize the distributors. This is a kind of performance exhibited by the manufacturers in the face of a downturn in the market and dealers are under high inventory pressure. Gesture, which is intended to unite distributors and increase the cohesion between manufacturers and distributors.

Li Zhenda said that although Changan Ford has not yet subsidized distributors, it has relaxed on the assessment methods for dealers. “This is also something that manufacturers do. At present, it is already the lowest point in the auto market. Manufacturers will proceed according to actual conditions. Adjustments; ease the pressure on our distributors."

The subsidy will have some positive effects and bring some hope to the dealers, but will it really become the "cotton jacket" that the auto market has experienced "winter"?

Manufacturers should loosen their business policies. "The dealer's sales situation is mixed, so the subsidy policy will affect fair competition, and even if the manufacturers make a large amount of subsidies, but on average, it is also a cup of water." Automotive industry expert Jia Xinguang revealed his pessimistic predicament to the above policy to reporters from the South.

Subsidy dealers are a kind of policy of the manufacturers, and FAW-Volkswagen punishes the behavior of increase sales, which is intended to regulate dealers and ensure the interests of consumers. It will also have a catalytic effect on the change of domestic auto sales model. Host plant price monitoring for the terminal, mainly to see whether the dealer free to reduce the price of disruption of their own interests chain; for price increases, the majority of attitudes are ignored. Nowadays, FAW-Volkswagen has decided to severely punish the price increase dealers' more favorable regulatory system for improving the sales network. At the same time, this move proves that the market is declining and manufacturers are looking for further sales promotion methods.

The market is not optimistic, dealers have a lot of pressure on the inventory, and it is easy to cause the capital chain to break. However, the subsidies for the distributors from the manufacturers are also not saving the poor. If the current domestic sales form does not change, the future dealers will encounter “winter”.

Manufacturers should not only see the situation that dealers are not selling well at the moment, but the main thing is to find out the crux of the problem. In Jia Xinguang's view, the problem of the capital chain is mainly solved. It depends on the manufacturer’s business policy. “Simple subsidies from manufacturers cannot solve the core issues.”

Jia Xinguang also quoted foreign examples. Foreign manufacturers have financial assistance to distributors. In addition, their car consumption patterns are mainly based on order orders, so that dealers can not increase prices or reduce sales at will, in order to maintain the brand's excellence. Domestic OEMs should learn from foreign sales models, adjust business policies, and adjust to changes in the market.

The changes in the automotive market cannot be fully estimated. The development of dealers is currently entirely affected by the market. In this regard, Sun Shiqing proposes that car companies cannot simply encourage dealers to stay at the level of selling cars, and should encourage them to do more services. The market for services is It is stable and subject to market fluctuations; at the same time, domestic car companies should improve their business policies and make them transparent, such as changes in prices and royalty.

Zhang Zhiyong also said that car companies should relax their business policies and broaden their profit margins.

Written: Nandu reporter Lei Min intern Fan Xiaoling inventory sword hanging in the second half of the auto market Quotes pessimistic in the end is to mention the car to get more points to rebate, or do not mention the car to reduce inventory, becoming the most tangled thing for many current dealers. In a depressed economic environment, consumers are always unwilling to pay attention to buying a car, and various manufacturers have invariably formulated a higher growth plan at the beginning of the year; under the contradiction, they have made great efforts to pressure the distributors to become indifferent. A survey shows that as many as 55% of the industry believe that the profitability of dealers may decline further in the second half of the year.

In May, several brands were reported to have broken out of dealers, and the contradictions between manufacturers and distributors intensified. In June, some people broke the news on Weibo, saying that a large factory recently handed out 3.4 billion yuan to subsidize dealers, but then it was exploded. This is just a trick to “push” dealers to disguise their cars in disguise.

All indications are that high stocks are like the sword of Damocles suspended in the auto market. If manufacturers still rely on “pressing the warehouses” to seek sales, it is likely to cause vicious price competition and service decline.

The coefficient of 1.4 "pressing the library" has begun again. "It is very difficult to be a dealer now. We must think of ways to sell cars and think about dealings with manufacturers." Recently, a well-known brand dealer talked about the status quo and was full of hardships. He said that since the market was sluggish this year, the car could not be sold, and the manufacturers still pressed the dealers. "We also cannot afford to pay for it directly, so we must think of ways to deal with it." The problem is that we cannot offend the manufacturers, so it is very hard.

The reporter learned that it is not uncommon for distributors who are currently in similar situations to those mentioned above. This year, the market has fallen unexpectedly. Reasonably, manufacturers should adjust their production and sales targets in due course. However, half a year has passed and few manufacturers have heard that they have lowered their targets. For manufacturers, as long as the car "sold" to the dealer, even if the realization of the "sales", so many manufacturers for the impulse, almost without exception, choose "press storage."

Last week, a big manufacturer in the Japanese company reported that it had spent 3.4 billion yuan to subsidize its distributors. On the surface, this seems to be a move by manufacturers and distributors to help each other. However, after careful investigation, it turned out that this was just a “stagger” and its essence was that manufacturers had increased the amount of vehicles for incentives to dealers and raised the “rebate” bonus. Since the market still hasn't picked up in June, dealers can get more rebates if they mention cars vigorously, but they also have to face greater pressure from stocks.

In the end it is to mention the car to get more points to rebate, or do not mention the car to reduce inventory, becoming the most tangled thing for many dealers. In fact, not only self-owned brands, but also many luxury brands are now facing a lot of inventory pressure. Compared with domestic cars, imported cars have higher selling prices and take up more capital costs. Many luxury car dealers are constantly facing the pressure of over 100 million yuan in inventory funds. (Source: Southern Metropolis Daily South Network)

Data show that inventories of dealers continued to increase pressure in May, and the average inventory coefficient has reached 1.4, a record high in recent years. In fact, most of the joint venture brands' inventory is close to two months of sales, and some of the independent brands' inventory is closer to three months of sales.

Since June is the last month of the second quarter and first half of the company's assessment, many manufacturers have further increased their efforts to press the distributors to get a good report card. Many distributors have reached the peak inventory pressure. In order to revitalize the funds, dealers have not hesitate to promote sales, and the current car prices have set a new low this year.

Profitability will fall further In June, dealers were constantly called for, and the most cost-effective period for buying cars this year has arrived; despite this, it is hard for the dealers to slap and drink. "A variety of promotions, various activities, still with fixed sales," "The more prices are sold, the more we can do nothing," and there have been complaints from distributors over the past few days.

Although China is brewing a new round of auto consumption stimulus policies, these policies are expected to have limited effects and have a limited effect on the auto market in the overall economic downturn.

The domestic automobile market still faces many negative factors in the second half of the year. First of all, the government’s economic development target for the first time this year “broken eight”, and almost everyone can feel the pressure of economic downturn, and the demand for consumers to buy cars is likely to be postponed.

On the other hand, under the pressure of transportation and environment, the domestic auto market in the first and second-tier cities has become saturated, and the growth of third- and fourth-tier cities has also been sluggish; as of the first five months of this year, domestic auto sales have only increased by 1.70% year-on-year, and the industry has previously There is a big gap between 10% expectation.

As the product line of joint-venture auto companies gradually explores, the space for middle and low-end markets on which independent brands rely depends on being squeezed; and subject to brand and product forces are not strong, in recent years their efforts to create mid-to-high-end cars have also been effective. micro.

After the exit of a number of major positive stimulus policies in 2011, the market share of self-owned brands began to fall. Except for a few state-owned large-scale automobile groups with deep government backgrounds, as well as enterprises with a certain scale of production and sales, the situation of numerous second-tier independent brands is in jeopardy. According to statistics from the China Automotive Industry Association, from January to April this year, only Changan, Chery and Geely entered the top ten sales of passenger vehicle companies, while many second-tier self-owned brands sold less than 100,000 vehicles in the first four months.

"This is the natural choice of market competition. The survival of the fittest is a manifestation of the market's health mechanism," commented an auto industry analyst. But at the same time, he expressed his concern: "The auto industry does not rule out the situation like the mobile phone industry (own brand) annihilated."

Insiders pointed out that although the development of self-owned brands has become the consensus and national policy of the entire industry, different companies have great differences in self-understanding, positioning, interests appeals, strategic goals and action strategies. Strengthening the unified planning and coordination of independent brands has become a pressing issue for the government.