ChangshaDealer20307

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1、FAW Hunan Trading Co. Ltd INTERVIEW DATE:29 十月 2021INTERVIEWER NAME:Jane XuInterviewee NameMr. Dan YuejingPositionVice General Manager Company and AddressFAW Hunan Trading Co. LtdTelephone/Fax0731-4721818Short SummaryLike the other main dealers in Changsha, FAW Hunan Trading Co. Ltd. Also suffer lot

2、 from the frequent change of provincial manager, more, the company feel somehow loss of being treated the same as other two dealers who do not need to share profit with FAWBackground FAW Hunan Trading Co. Ltd. is the Joint Venture between FAW and Hunan Auto Trading Group established in 1987. Now, FA

3、W control 55% of the share while Hunan Auto Trading take 45%. Total current fix asset of the company is RMB 40 million, FAW share the annual profit with FAW Hunan Trading Co. Ltd; According to Mr. Dai, there are only 6 such profit shared dealers in China among which FAW Hunan Co. Ltd is the largest

4、one. It sold all FAW brand cars including truck and passenger car. (Last year Truck 400, Passenger car 430). Total inventory space 120,000m2 ( 8,000m2 for Jie Fang) , there is a 2000m2 service station for passenger cars (Hong Qi, Audi and Jetta) There are 3 major dealers in Changsha: FAW Hunan Tradi

5、ng Co. (Dealer1), 1999 truck sales volume 390 FAW Hunan Trading Co. Ltd (Dealer 2) , 1999 truck sales 261 FAW Changsha Service Station (Dealer 3), 1999 truck sales 204Key Issues FAW Hunan Trading Company is the first dealer of FAW truck in Hunan, in 1987, FAW only do truck business with it, but as t

6、ime goes on FAW started to select other local dealers. This has severely intense the price competition and reduce the profit per unit, Mr. Dai said FAW should really care its long-term interest in the province and take care of its profit-shared dealer. Mr. Dai contribute the phenomenon to the freque

7、nt change of the provincial company managers, most of them want to sell as many as possible through different dealers in their own years (7 managers have been changed in the past 5 years) Key customer base : 90% is individual buyer in transportation business; 10% is SOE transportation team FAW truck

8、 are not well sold in Hunan market since most of the end-users are highly price-sensitive Transportation fee included in the retail price per Dong Feng truck is much lower than Jie Fangs RMB2691. (FAW Changchun is 3000 km away from Hunan while SAW only hundreds of km away) Dong Feng trucks dumping t

9、endencydiscounted trucks everywhere Its hard to predict end-users changing demand in Hunan Profit per truck is around 1000, this is mainly from rebate, Retail price differ unit by unit according to the bargain result of each deal, current sales price is almost equal to A network price. Overall cost

10、in 1999: RMB 2 million Rebating system is not clear, Mr. Dai said he could hardly predict the rebate revenue they could get per year. He prefer Jettas clear rebating system, which is a system based on dealers performance:1.2% if dealer could pay in cash 0.8% if dealer could provide draft impawn 0.4-

11、0.6% if dealer has service functionRebate system of Jetta0.4% if dealer invest in Brand Image building0.6% if dealer adopt suggested organization0.6% if dealer adopt performance measurement and motivation system Sum: Maximum 5% of the annual sales could be back to the Jetta dealer as rebate if he is

12、 qualified for the above requirements Mr. Dai suggest FAW choose the “Yi Ku Che” warehouse location scientifically. Currently, warehouse of Jie Fang “Yi Ku Che” in Changsha is located at FAW Changsha Service Station, this is not fair for the other two dealers since they could hardly know the invento

13、ry level, more, FAW pay for the inventory plat lease per year FAW should better change some of the truck component to lower the overall purchasing cost of end-users . For example, the 14-layer tier is not fit for the long-distance transportation, almost all the end-user change it to 16-layer tier af

14、ter purchasing (7 tiers all together) , change cost around 3K, they take the 3K into consideration as part of the total cost. Actually the changing cost inside the FAW is only around 1K R&D department in FAW is slow in response towards the market demand. Attitude toward 3 in 1 Mr. Dai is not willing

15、 to carry the large 3 in 1 investment (estimated no less than 8 million) out before he could see any strong commitment from FAW towards his company. Mr. Dai said he feel un-safe of the relationship with FAW since FAW provincial branch used to threaten the company of stopping its truck dealership if

16、it couldnt achieve the annual delegated sales task. In Hunan, the establishment of truck service station causes negative profit and will not attract dealers only if FAW could provide related policy allow dealers who have service functions gain back their money in auto sales . Mr. Dai said Jetta has 2 service station in Changsha, they all lose money; currently a new one is under construction ;Why the dealer is still keen on establishing Jetta service station is that the they could get the advantage policy from FAW in auto-sales which could make up their lose in the service part3