Heavy truck industry into dark hour or up to 4 years!How dealers Can “Survive”
Heavy truck industry is facing a dark hour, dealers are facing the test of life and death.According to the data from China Automobile Association, in February 2022, the overall sales volume of China’s heavy truck industry was 59,000 units, down by 50% year-on-year. Since May last year, it has been declining for 10 consecutive months, forming a “10 consecutive decline”.In addition, there were 8 monthly year-on-year declines of more than or close to 50%, indicating a serious contraction in market demand.Faced with such a grim situation, what can dealers do to survive the “dark hour”?Into the dark hour in the economic environment recession, six switch, demand overdraft and other adverse factors, heavy card industry into continuous “negative growth” quagmire, to the dark hour has come.Since May last year, the heavy truck industry monthly sales have been declining for 10 consecutive months, forming a “10 consecutive decline”, and a large decline.Data from China Automobile Association show that from May 2021 to February 2022, the monthly sales volume of heavy truck industry continued to negative growth, suffering from “10 consecutive declines”, and the decline is large — eight monthly declines are more than or close to 50%.From the change of sales growth in the past four years, the heavy truck industry has never seen such a long period of negative growth, and the sustained decline has never been so large.From the market segment, the three major heavy card market into the dark moment, no a segment plate can grow against the trend.As of February this year, the tractor market has been declining for 11 consecutive months since April last year, forming an “11 consecutive decline”, with a drop of more than 50% in half a month.Since may last year, the dump truck market has formed a “10 consecutive decline”, a drop of more than 70% in half a month;The truck and special vehicle market has been falling for 9 consecutive years since June last year, with a drop of more than 50% in half a month.As the saying goes, after a big fall, there must be a rebound.Heavy truck industry in the “10 consecutive decline”, can soon usher in a rebound?The author believes that from the current industry situation, the heavy truck industry is difficult to rebound in the first half of this year.There are four reasons: first, the current freight market is still more cars and fewer goods, low freight rates, shortage of goods, which is difficult to drive the purchase of new cars demand;Second, part of the flow of new cars fell into the second-hand car market, affecting the sales of new cars;Third, the economic environment has not recovered due to the repeated impact of the epidemic.Fourth, a higher base for the same period last year.Heavy truck industry market is not only difficult to rebound in the short term, and nearly four years or it is difficult to walk out of the downward channel.Last year, Fangde.com published a column titled “How similar are 2021 Heavy Trucks and 2011? Has a New Downward cycle begun?” in the column titled “Yao Wei’s Seven Days’ Talk”.1.39 million heavy trucks sold in 2021? Is it really a 10-year cycle?Two articles predict the demand of heavy truck industry in 2021-2025.According to Fangde.com, in 2021-2025, the heavy truck industry may replicate the demand trend from 2011 to 2015, and fall to about 54% of the 2020 sales peak (1.62 million units) in 2025 (that is, about 870,000 units), which is considered to be out of the bottom of this downturn cycle.Thus, at present, the heavy truck industry has slipped into the dark hour, the time may be as long as four years, the long night is difficult to break dawn, dealers will face the test of life and death.In the long night, how do dealers spend the darkest hour?What to do to survive?Transformation is imminent.At the 2022 Business Conference, Hu Hanjie, chairman of FAW Jiefang, clearly pointed out that “in the future, it will be difficult to make profits from new car sales.It is difficult for dealers to make a living just by selling new cars.That view was echoed by Yiliang Fang, Roland Berger’s global senior partner and head of Asia Pacific commercial vehicles, who also argued at a conference late last year that it would be difficult for the heavy truck industry to rely solely on new-car sales in the future.In the heavy truck industry, there has always been a view that “the European truck market today is the Chinese market tomorrow”, which has been widely recognized.At present, the profit model of the European heavy truck industry is to profit from service, rather than pure new car sales.For example, when European heavy truck sells vehicles, it not only sells bicycles, but also provides users with a whole set of liberation programs, including the buyback of second-hand cars and other programs.According to Fangde.com, in recent years, about 30% of the revenue of Daimler truck business (mainly Benz heavy truck sales) comes from service, and proposed that the service revenue target should reach 50% by 2025.From the perspective of the development mode of Chinese passenger vehicles, the post-market service sector of heavy truck industry is also becoming more and more important.In recent years, passenger car sales have entered the era of profit from service, and the era of profit from new cars is gone.For example, in 2021, due to the impact of chip shortage and price increase, many passenger car sales were at a loss, but many dealers also achieved profitability by relying on post-market services.For example, the used car business has become a profit point for many passenger car dealers, which did not exist in the early years.As the proportion of large customers in demand side increases and the users become younger, the demand of Heavy truck users in China for vehicles is also changing significantly, especially for higher service capability.For example, enterprise procurement will put forward more demands on vehicle operation and after-sales supporting service capabilities.In order to adapt to different market segments, enterprise customers have high demand for vehicle customization.Therefore, the post-market future space is very large.According to the estimates of China Transport Research Institute, in 2020, the number of trucks exceeded 30 million, the size of the tire market was 128 billion yuan, and the size of the maintenance market was 312 billion yuan.By 2020, the size of the aftermarket will reach 440 billion yuan, and the aftermarket has huge potential.In the bicycle profit decline at the same time, many heavy card leading enterprises have been staring after the market.For example, Jiefang proposed at the 2022 Annual Business Meeting that in 2022, the company’s marketing business should be transformed to the full value chain, post-market development and sales should be considered as equal or more important, and the profit structure should be adjusted to expand the profit proportion of finance, insurance, second-hand cars, maintenance and repair businesses.For example, Dongfeng Commercial Vehicle also emphasized the post-marketing strategy at the 2022 Annual Business Meeting, requiring the post-market Business Division to focus on customer value in 2022, promote the transformation of digital marketing, and establish an ecological system that serves customers in all scenarios.In the current market environment, the way to make money simply by selling cars has become increasingly narrow.If dealers stick to the previous sales model, it may be difficult to survive in the next four or five years;Dealers who carry out the new concept of “selling products is not as good as selling services” may have difficulties in the initial stage of transformation, but once they survive the difficult period in the next few years, the road in the future is bound to get wider and wider.