DealerNorveco0229

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1、North Vehicle Company Shandong Branch INTERVIEW DATE:Feb 29th, 2000INTERVIEWER NAME:Anne WangInterviewee NameMr. Dai HengmingPositionVice General Manager Company and AddressNoveco Shandong BranchNo. 69 Beiyuan Rd., Jinan 250100Telephone/Fax(0532) 8610186BackgroundKey ProcessesKey IssuesConclusionsBa

2、ckgroundn Founded at the beginning of 80s, China North Vehicle Co. (Norveco) is a state-owned company and a subsidiary of China North Industries Corp. (Norinco). Norinco is the biggest weapon producers/dealers in China. Norveco is restructured in 1998 with a total capital of 600Million RMB. Norveco

3、sold 20,000 autos last year; annual revenue was around 1.2 Billion RMB.n A comprehensive business network of Norveco has been set up in major Chinese provinces, covering Beijing, Tianjin, Sichuan, Shaanxi, Yunnan, Guizhou, Hebei, Shandong Hubei, Anhui and Jilin. Norvecos business ranges from sales a

4、nd maintenance of autos, spare parts supply, after-sale services, car rental, auto information service, etc.n Norveco set up five branches in Shandong: Jinan, Zibo, Weifang, Taian and Heze. Currently 2 salesmen are assigned specifically for Jiefang trucks in Jinan.n Most of Norvecos customers are en

5、d users. Among them, 20% of the sales goes to big companies while 80% of the sales goes to private owners. However, Norveco is more interested in developing large customers as they have strong financial background. Besides, large customers replace trucks every 2 years. Private customers are more int

6、erested in light trucks and usually replace trucks every 4 years. n According to Mr. Dai, FAW trucks are competitive in brand image, price and product quality, but SAWs forwared-head truck design are more welcomed by users. Mr. Dai dont think FAWs heavy-duty trucks have great potential due to the li

7、mitation of Shandongs highway construction.Key processesn Customer development- For large customers, Norveco sends salesmen to visit regularly and develop long term relationship.- For private customers, Norveco has a large truck depot for private customers to visit and assign one salesman staying in

8、 the depot. Cars and trucks are washed every other day to keep good image. n Delivery time- If there is turnover trucks available, no lead time is needed- If turnover trucks are not available, then four days lead-time is required. n Inventory turnover- Inventory turnover is around 10 days for best s

9、elling trucks. As Norveco is experienced in truck selling, prediction of truck market demand has 90% accuracy.n Sales expenses per truck- Gasoline and damage in transportation:150 RMB - Treatment / travel expense50 RMB- The treatment expense is expected to increase another 50 RMB if Norveco sets up

10、exclusive store for FAW trucks.Key Issuesn Norveco currently is not exclusive dealer of FAW(FAW products are 60% of Norvecos total sales, however). The reason is that FAW do not give any policy favouring exclusive dealers: since rebate are issued solely based on sales value, as long as a dealer can

11、sell FAW trucks to a certain amount, FAW wont care if the dealer also sells SAW trucks in the mean time.n Mr. Dai expressed discontent with FAW Trading Co.s unstable pricing in 1999. According to him, FAW Trading Co. raised its truck price abruptly in best selling seasons. Norveco purchased a lot of

12、 trucks at that time. Then FAW reduced its price again when the low season came. Thus Norveco had to sell its inventory in lower price, which caused huge loss to Norveco. Mr. Dai hopes FAW to provide a stable price all through the year. ConclusionsNorveco is a large, powerful auto dealer with military background. It brought large sales to FAW in 1999, but it still remains to be seen if Norveco is an ideal potential exclusive partner, for it might be too powerful to be controlled by FAW alone.2