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“Money-making Tips” for Car Dealership Groups

Date:2Minutes ago Source:未知 Authour: Sun Yong  

“Money-making Tips” for Car Dealership Groups

The 2017 Guangdong Automobile Dealership Industry Summit Forum was held last on April 6 in Guangzhou. Executives from car dealership groups in Guangdong and heads of car e-commerce vendors like Suning and Youxin all attended the event. I was invited there as a guest and participated in the discussion on “Traditional Car Dealerships - Market Entry and Challenges under the New Economy”. The purpose of this discussion was to figure out what the traditional car dealerships should do next, and how to maintain their profitability in a market where competition is becoming increasingly fierce, where the future will see the upcoming Automobile Sales Management Measures, and where further threats are coming from new car retailers like Gome and Suning and e-commerce after-sale service vendors.

After a heated discussion, we ultimately concluded that the secret of success was the simplest common sense – “follow the manufacturer and find a good manager”. This has been the key to “money making” for car dealerships in the past; it remains so at present and will continue to be the case in the future.

The adage “follow the manufacturer” means that the fate of dealers, who are in the downstream chain of the automotive industry, is in the hands of manufacturers. Dealers should take the initiative to maintain good relations with manufacturers because manufacturers are the host and dealers are the guest. This is a fact of life and it is not going to change in the foreseeable future, whatever the impact of Automobile Sales Management Measures or the online automotive retailers. The fate of its dealers will largely depend on how well a manufacturer develops in the future, and the most important indicator of such development is whether the manufacturer can keep coming up with “hot sellers”. As long as they have a “hot seller” in hand, the prospects for a dealer can’t be too bad. And if they follow the manufacturer’s instructions, and do a little more innovating on their own account, then there is a good chance that they will increase their profits.  

Some say that after the Automobile Sales Management Measures are issued, the status of car dealers in the market will see a big improvement. This I doubt very much. In my opinion, this policy will not make too much difference in the market, because the “three pieces of good news” have already been digested by the market.

Firstly, dealers have already been able to sell cars of any brand for three full years now, since the State Administration of Industry and Commerce cancelled the registration of general automobile dealerships and brand-authorized dealerships.

Secondly, dealers are already able to purchase spare parts from other suppliers. According to the Guiding Opinions on Transformation and Upgrading of Automobile Service Industry for Service Quality Improvement issued by ten ministries and commissions including the Ministry of Communications three years ago, 4s stores can purchase auto spare parts from secondary channels.

Thirdly, restrictions on the sales activity of dealers have already been removed. In the past years, the National Development and Reform Commission have taken regular antitrust actions to prevent car makers from utilizing their monopolistic advantage to interfere with free competition among 4s stores.

This new Automobile Sales Management Measures are just a summary of these favorable policies, and will not bring any fundamental change to the current relationship between manufacturers and dealers.

“Find a good manager” means that even if you are authorized to sell good cars, you still have to find an excellent 4s store manager to run the business. In this era of the mobile Internet, the criteria for “a good manager” include not only “old standards” but also “new requirements”. The former means the manager needs to have both ability and integrity. The best of such candidates tend to come from those who started their careers at the grass-roots, because such people are down to earth and very loyal to the company. “New requirements” means that a manager should not be conservative; on the contrary, he/she should constantly adapt him/herself to the changing times and be able to communicate fully with new-generation consumers. Based on these criteria, many large dealership groups are now starting to hire young people from the 90s as their store managers.

The times they are a-changing, but the truth remains the same. If a car dealership group can follow the manufacturer who keeps up with the times, and find store mangers who can meet the customer’s new needs, it will retain its strength. There is nothing new in this, but after searching all over for new ways of transformation and innovation, dealership groups still find this “trade secret” the most useful.

There are limits to the innovations that dealers can make. Ultimately, what they can do is keep to the most basic and effective practices, and where they will end up depends only on whether they can do this or not. That is all.

        (The author is currently President and CEO of Know-How Education Ltd. Having been working in the auto media for 12 years, he used to serve as Editor-in-Chief of the Economic Information Daily - Automotive Weekly under the Xinhua News Agency and Deputy Editor-in-Chief of the China Auto News under People’s Daily. He also worked for automobile companies for 10 years. He used to serve as Member of of the Chery Automobile Management Committee and General Manager of the sales company, Deputy General Manager and General Manager of Commerce Department of Nanjing Fiat and Director and Deputy General Manager of Sinomach Automobile Co., Ltd. (China Automobile Trading Co., Ltd.))
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