Ex­perts doubt­ful of new car sellers

China Daily (Hong Kong) - - BUSINESS - By LI FUSHENG li­fusheng@chi­nadaily.com.cn

As re­tail gi­ants Sun­ing and Gome foray into car sales, most an­a­lysts and auto in­dus­try in­sid­ers won­der if such al­ter­na­tive chan­nels would suc­ceed.

Luo Lei, deputy sec­re­tary­gen­eral of the China Au­to­mo­bile Deal­ers As­so­ci­a­tion, said car sup­plies could be a prob­lem.

“A fore­most prob­lem that con­fronts Sun­ing is — where would it get car sup­plies?” said Luo in an in­ter­view with Auto Busi­ness news­pa­per.

“You know main­stream car­mak­ers would not work with Sun­ing while ig­nor­ing their tra­di­tional sales net­work.”

Among oth­ers, MercedesBenz, GM and GAC Mo­tor said they do not have any co­op­er­a­tion agree­ment with Sun­ing yet.

Luo ar­gued that Sun­ing’s car sales model is not new. “It has ex­isted for a long time, like the Yayun­cun car mar­ket in Bei­jing. They are, in fact, unau­tho­rized mar­kets.”

Li Jiny­ong, chair­man of Zhong­hai Tongchuang Group, which has car sales as one of its ma­jor busi­nesses, said car­mak­ers may not want an ex­ten­sive sales net­work with a strong bar­gain­ing power.

Some peo­ple had ex­per­i­mented with the model of car su­per­mar­kets but it did not beat the 4S model ...”

sec­re­tary-gen­eral of the China Pas­sen­ger Car As­so­ci­a­tion

“They will not for­get the les­son of home ap­pli­ance pro­duc­ers, who first re­lied on Sun­ing and Gome and ended up hav­ing to work with them.”

Cui Dong­shu, sec­re­tary-gen­eral of the China Pas­sen­ger Car As­so­ci­a­tion, said even some deal­ers may sell their cars to Sun­ing, but that would make it dif­fi­cult for Sun­ing to make money.

“So if Sun­ning is of­fer­ing the same prices as these deal­ers, it is los­ing money.”

Be­sides, it would be hard for Sun­ing to of­fer sales ex­pe­ri­ence or af­ter-sales ser­vices like tra­di­tional deal­ers.

“Imag­ine if you want to have a test-drive, they may not be able to ar­range it be­cause they are of­ten lo­cated in busy down­town ar­eas. And I do not think their sales­men can ex­plain tech de­tails. Yes, they can hire such staff, but that means a lot of time and a lot of money.”

On Sun­ing’s in­ten­tion, Cui said that brick-and-mor­tar re­tail is de­clin­ing in China, with car sales be­ing one of the few ex­cep­tions, so Sun­ing wanted to give it a try.

“Some peo­ple had ex­per­i­mented with the model of car su­per­mar­kets but it did not beat the 4S model, which only grows stronger,” said Cui. The 4S model refers to sales, spare parts, ser­vice and sur­vey store model.

He said the model of dealer au­tho­riza­tion has a long his­tory in­ter­na­tion­ally and as cars are prob­a­bly the most ex­pen­sive house­hold pur­chase, cus­tomers have more trust in au­tho­rized deal­ers.

Yale Zhang, man­ag­ing di­rec­tor of con­sult­ing firm Au­to­mo­tive Fore­sight, said even if car sales still make some money, Sun­ing’s logic ap­pears to be flawed from the very start.

John Zeng, man­ag­ing di­rec­tor of LMC Au­to­mo­tive Shang­hai, said Gome’s model is sim­i­lar to on­line car cars at Alibaba’s Tmall, but it does not change the tra­di­tional sales net­work at all.

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