Xpeng will introduce more distributors; NIO "Alps" experimental dealer model

In order to sell cars, the new forces rediscovered the value of dealers.

Wen 丨 Wu Xiaoyu Si Wenwen
Editor 丨 Wang Hailu

Xpeng embraces distributors, but does not cancel direct sales

In March this year, He Xiaopeng, chairman of Xpeng Motors, introduced in the earnings call that Xpeng's directly operated stores accounted for 70%. This number will change a lot next.

In the first half of this year, Xpeng closed some inefficient directly-operated stores. The total number of stores decreased from 420 at the end of 2022 to 411 at the end of June. In July this year, Xpeng released the franchise authorization of dealers. Recently, a number of people familiar with the matter told "Late Auto" that some of Xpeng's directly-operated stores will be transferred to dealers, but the direct operation model has not been canceled, and the directly-operated stores with good performance will always exist.

An employee of the Xpeng direct store said that not long ago, his Xpeng comprehensive direct store was sold to a local distributor, and the store's performance in the current period did not meet the assessment target. After the dealer takes over, it will continue to pay the store rent and labor costs. Xpeng provides dealers with a store opening subsidy, and in addition, it pays dealers a commission for each car sold. If the reseller hits the target for one consecutive quarter, they will also receive a 4-point base cash back.

"Late Auto" learned that in order to attract dealers, on September 2, Xpeng held a new retail conference, and an insider who attended the meeting said that more than 150 dealers participated in the meeting, including more than 50 network expansion people of the top 100 dealer groups in the country. Old dealers sit in the front 8 rows and new dealers sit in the back 20 rows.

Xiaopeng launched the "Jupiter Project" at the meeting. Jupiter is the planet with the strongest gravity and the most moons in the solar system. In order to sell more cars, Xpeng also hopes to attract large group dealers into its sales system.

In a media interview in April this year, He Xiaopeng said that 3 million vehicles is the life and death line for car companies to survive in the next 10 years. At the dealer conference, Wang Fengying, president of Xpeng Motors, said that Xpeng's sales target in the next three years is to reach one million vehicles.

Wang Fengying has many years of experience in managing dealers during the Great Wall period, and some people related to the Great Wall commented that she "can manage the effect of direct sales of dealers". In Great Wall Motor's sales network, six or seventy percent of dealers have followed Great Wall for 20 years.

In order to achieve the sales target, Wang Fengying said that Xpeng plans to build 500 comprehensive stores integrating sales and service functions, 1,000 experience centers and satellite stores in the next three years to achieve a closed loop of sales and service. According to the financial report, Xpeng has only completed 30% of the store construction target.

Xpeng's comprehensive store is similar to a large 4S store, with sales, experience, activities, delivery, and after-sales service functions, and is located in the core area of automobile trading in various cities; The main function of the experience center is brand display and sales, which is generally located in the core consumer business area of the city. The satellite store is located in the mall, with a small area, short lease period, similar to a temporary booth, but with a fixed decoration façade.

Late Auto learned that about 75% of the dealer groups that attended the conference have applied for authorization. Up to now, Xpeng has received nearly 1,000 authorization applications. In September and October, Xpeng expects to complete the review of more than 100 authorized stores, and add 150 authorized stores this year.

Xpeng's requirements for authorized dealers include: on the site, located in the city's mainstream automobile business district, the actual use area is not less than 1000 square meters, and the sales exhibition area is not less than 300 square meters; In cities such as Tangshan and Xingtai in Hebei Province that do not have Xiaopeng stores for the time being, and cities with light capital operations such as Handan and Cangzhou, dealers can only open urban exhibition halls, supermarket experience centers, and after-sales stores, and cannot open comprehensive stores for the time being; It can accept one dealer to operate several stores at the same time, light renovation and decoration; In terms of capital, the registered capital of the authorized operating company is not less than 10 million yuan, and the annual operating income of the automotive sector business needs to be more than 100 million yuan; Preference for gearing ratios below 70%.

On the whole, Xiaopeng's attitude towards dealers is more open. Previously, dealers could not directly open a larger comprehensive store, but had to "take three steps": build a supermarket store first; Sell well, and then open an after-sales store; Only when the performance meets the standard, can a comprehensive store be built. Now, qualified dealers can directly open general stores.

Xpeng's sales model has gone through three stages. At the beginning of its establishment, Xpeng adopted a direct operation model, and the first 20 stores were all directly operated stores. In April 2019, a month after the delivery of the first production car, the G3, Xpeng announced at the Shanghai Auto Show that it would open dealers and service providers to join the partnership. In the following nearly 4 years, Xpeng's direct management and franchise models coexisted. The cooperation between Xpeng and dealers is order-based sales, no inventory pressure, and unified retail prices.

As of the beginning of this year, Xpeng had 126 dealer stores and 294 directly-operated stores, respectively, with more directly-operated stores. But then, the authorized dealer model will dominate. According to the plan, the number of authorized stores of Xpeng's dealers will reach about 276 by the end of this year.

Some dealers took over Xpeng's original direct stores, and some planned to open a new store after obtaining Xpeng's authorization, and an intended dealer told Late Auto, "At present, the sales of fuel vehicles are declining, and new energy vehicles are better sold." If you don't put money upside down, the dealer has a chance. ”

For the placement of employees in the direct management system, the above-mentioned person said that at present, some employees of Xpeng have changed stores according to the company's arrangement, and the other part has changed contracts to continue working in stores operated by dealers, "after changing contracts, the basic salary will change." Some employees of the after-sales system have left with compensation agreements. According to the financial report for the first half of 2023, as of the middle of the year, Xpeng's sales and marketing system had a total of 5,537 employees.

Xpeng transferred most of its directly-operated stores to dealers this time, aiming to reduce operating costs and improve market coverage. According to the financial report, in the first half of this year, Xpeng Motors' cost of sales was 9.23 billion yuan, with a net loss of 5.14 billion yuan and a gross margin of -1.4%. With the high sales of G6, the G9 facelift, and the launch of the MPV model X9, Xpeng needs more stores to cooperate with selling cars.

In addition to opening stores, Xpeng's sales system reform continues. In order to focus on management, Xpeng's sales war zone has been reduced from 24 to 12.

In the second quarter earnings call, He Xiaopeng said that in the second half of the year, Xpeng Motors will accelerate channel reform, "carry out a drastic survival of the fittest in the sales network, and introduce excellent dealer partners at a faster speed to accelerate market share expansion in second-tier and lower-tier cities." ”

NIO's "Alps" brand may cooperate with distributors

"Late Auto" learned that in the first half of this year, NIO took the initiative to contact a domestic head dealer group and did some "experiments" for its sub-brand Alps to open the dealer model. People familiar with the matter said that NIO plans to undertake Alps' after-sales service and delivery center by a national dealer group, but the supermarket stores are still directly operated.

NIO has always been a strong supporter of the direct management model. Even if it expanded overseas markets last year, it opened five NIO Houses and seven NIO Spaces in five European countries, all of which are directly operated stores. At the press conference of NIO's entry into the Norwegian market, Li Bin once again emphasized, "NIO is a user enterprise, and direct connection with users is very important and fundamental to the whole work." ”

As of the end of August this year, NIO has 134 NIO centers, 286 NIO spaces, 304 NIO service centers, and 58 NIO delivery centers around the world. Both NIO Center and NIO Space are offline experience stores, focusing on sales and brand display functions, and NIO Center has a larger investment and higher positioning. The service center and the delivery center are responsible for after-sales service and delivery of vehicles, respectively. Among all offline outlets, only the after-sales service adopts a mixed method of direct management and authorization, and the rest are directly operated.

The NIO brand briefly tested the water with the owner acting as the franchisee. At the end of 2019, NIO faced financial pressure and launched the Co-creation Partner Program to save costs. Car owners can fund the construction of NIO space, and NIO will send personnel to operate it on their behalf. An old car owner who participated in the construction of the store told Late Auto, "At that time, the annual turnover was 5.6 million yuan. In one year, car owners helped NIO build more than 100 NIO spaces.

The hybrid model allowed NIO to quickly increase the number of stores, but it also brought some management challenges. At the end of 2020, NIO re-established its dominance of the direct sales model, and all newly opened NIO spaces adopted the direct management model, and the stores invested by car owners were also taken back by NIO and converted to direct management.

Alps is a sub-brand launched by NIO for the 200,000-level market, led by NIO Senior Vice President Ai Tiecheng. Prior to joining NIO, Tiecheng was the General Manager of WeWork Greater China. Today, the Alpine team has more than 800 people.

Series deliveries of Alps' first model are scheduled for the second half of 2024. At the earnings conference in the second quarter of this year, Li Bin revealed that the brand's first model was successfully developed, the first TT model (production line verification car) has rolled off the production line, and the second product is under development.

"Late Auto" learned that the first car of Alps is a pure electric sedan, built on the NT3.0 platform, and supports both battery swapping and high-voltage fast charging technology. Alps plans to produce at NIO's F3 plant, a person familiar with the matter said. The F3 plant is located in Hefei Xinqiao, adjacent to the F2 plant, and is the second phase of the vehicle and key core components supporting project of the NeoPark Xinqiao Intelligent Electric Vehicle Industrial Park, and NIO has not officially confirmed the news as of press time.

According to previous media reports, Alps' first car will use NIO's self-developed intelligent driving chip. NIO's self-developed lithium iron phosphate batteries and 4680 batteries will also be supplied to NIO and Alps brands.

In 2024, the NIO brand will not deliver new products. Li Bin said that the current eight models have covered the needs of 80% of users in the high-end market, and the next step is to comprehensively improve sales performance. The Alps are the biggest attraction for NIO's new cars next year.

In the second quarter of 2021 earnings call, Li Bin said that he hoped that the Alpine brand could provide lower prices than Tesla and provide better products and services. At an exchange meeting with investors this year, Li Bin said that the number of Alpine brand models is about half that of the NIO brand, and its sales target for its main models is 50,000 units per month.

Products to the public, chasing sales scale, so that Alps brand also began to think about adopting a lighter sales model - embracing distributors.

Cooperate with distributors, but do not press the warehouse

In December 2013, Tesla opened its first directly-operated store in Parkview Herbs, Beijing, with offline experience, online ordering, and unified prices nationwide. After that, new forces such as NIO and Ideal followed Tesla and opened a direct operation model.

As of the end of June, Li Auto had 331 retail stores, and this year's target is 400, fully covering third-tier cities and sinking to the head fourth-tier cities. Even if it is necessary to focus on sinking channels, ideal still adheres to the direct management model. Li Xiang, CEO of Li Auto, also posted on Weibo in July this year: "It will not authorize any agents and dealers, and will always adhere to the direct sales model." ”

In Li Xiang's view, the direct sales model can better and faster get consumers' feedback on products, which is conducive to improving and upgrading products, and can also control prices and profits more effectively.

However, the direct operation model is relatively heavy, and car companies need to bear the investment and operating costs of the store and manage the sales personnel. Last year, Tesla closed a number of stores in China's core business districts and instead opened integrated stores in the suburbs where dealers gather, similar to Xpeng's practice of building integrated stores in the core areas of the auto trade.

The advantage of the dealer model is that the distributor can share the construction and operating costs of the store, and the large dealer group controls the local customer resources. Li Ruifeng, CGO of Great Wall Motor, once said that dealers have "higher subjective initiative" due to performance pressure.

Before 2015, car dealership was good business in the golden age of the development of fuel vehicles. But from 2017 to 2022, China's fuel vehicle sales decreased by about 7 million units, and new energy vehicles increased by 4.47 million. Especially in January this year, fuel vehicles fell 44.8% year-on-year.

Fuel vehicles can not be sold, car companies are fighting price wars, dealers are also under great pressure on inventory. According to data from the China Automobile Dealers Association, only 20% of dealers in the first half of the year were able to achieve the sales target set by the main engine factory, and 31.7% of dealers said that they could only complete more than 80% of the sales task; 11.7% of dealers reported a completion rate of less than 50%.

Some dealers began to explore transformation and turn to new energy brands. According to 36Kr previously reported, in 2022, BYD's national average annual sales volume will be 1,500 vehicles, and the average annual sales volume of its own brand will be 600 units. BYD officially shows that the average price of bicycles in 2022 is 170,000 yuan, corresponding to the average annual income of each store exceeding 200 million yuan. Zhongsheng Shares, the dealer that ranked first in revenue last year, also tilted its business focus to new energy, and the supermarket store cooperated with Xpeng has been put into operation, and the sales of new energy vehicles increased by 69.4% in 2022.

In the past few years, some new energy vehicle companies have built up brand recognition, and now they have reached the stage of chasing sales scale, which has also allowed them to rediscover the advantages of dealers.

Compared with the traditional cooperation model between car companies and dealers, new forces and brands such as Xpeng and Extreme Krypton do not pressure inventory on dealers, and the cooperation model is more friendly to dealers. Dealers only need to bear the daily operating costs, do not undertake the procurement tasks specified by the manufacturer, and bear high capital and inventory risks for this.

Traditional car companies are also laying or improving sales networks for their new energy products. Geely Galaxy Sequence plans to establish 600 sales channels by the end of the year, and adopt a parallel sales method of direct management and distribution banks; Great Wall Haval's new new energy series plans to establish 800 dealers by the end of the year.

Lin Jie, general manager of Lynk & Co Automobile Sales Company, once introduced in a previous interview with the media that Lynk & Co 08 will adopt a national distribution agency system, a unified national price, online sales, and dealers are responsible for experience and delivery.

"We eliminated the original rebate and changed it to a segmented commission." Lin Jie said, for example, clue retention (entering the store to leave information, so that the main engine factory can find the intended user through the clue), which store the user goes to, which store will charge the fee. Each link such as deciding, test driving, and delivery has specific benefits.

At the 2013 shareholder meeting, an investor threw a sharp question to Tesla CEO Musk: "The American Automobile Dealers Association (NADA) is waging a war against you, what are you going to do?" Musk didn't flinch and replied: "Working with dealers won't end well." ”

That year, Tesla brought the direct sales model to China and attracted NIO, Xpeng and Ideal. At that time, the penetration rate of new energy was only 0.2%, and the most important issue facing the new automakers was to build consumer awareness. Shopping malls located in urban business districts have their own flow of people, and new forces have quickly established a high-end image in the shopping mall.

In 10 years, the penetration rate of new energy has increased by 20 times, and as competition intensifies, the focus of car companies has become who has better products, more sales, and stronger operating capabilities. Dealers who can help car companies reduce operating costs and quickly reach users return to the vision of car companies. There is no absolutely correct channel model, and the most efficient channel that adapts to the current selling car is the best channel.

Zhao Yu also contributed to this article.