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2017-11-01 13:00:39

Xiang Xingchu: six directions focus on layout, to achieve brand upward

Mr. Xiang Xingchu, General Manager of JAC Motors Group

My report comprises two distinct sections: the first delineates our outlook on the future of the Chinese automobile market, while the second expounds upon the pivotal directions for JAC Motors. At a macro level, we anticipate that despite an imminent phase of marginal growth in the Chinese automobile market over the forthcoming years, it will continue to thrive within a developmental zenith. This resilience is chiefly attributed to the expected maintenance of China's GDP growth at around 6.5% to 7% in the foreseeable future. The proactive adoption of new technologies and evolving consumer behavior will profoundly influence the automotive industry. Summarily, the external landscape of the automotive market is characterized by eight significant shifts and developmental trends that warrant acute attention.

Firstly, the unwavering nature of consumer demand and the progression towards enhanced consumption favor a sustained growth trajectory for the passenger car segment. There is a discernible shift in consumer demographics, with a heightened preference for personalized and tailored products.

Secondly, the pressures of a downturn in the macroeconomic sphere distinctly impact commercial vehicles, limiting their future growth prospects.

Thirdly, new energy vehicles continue to enjoy substantial political backing, encompassing ongoing robust growth stemming from prevailing subsidy policies and prospective new energy credit policies.

Fourthly, stringent policies advocating energy conservation and emissions reduction propel advancements in traditional fuel vehicle technologies.

Fifthly, an overall surplus in production capacity has resulted in an oversupply of automotive products, intensifying price competition. Inevitably, market expansion and mergers and acquisitions are on the horizon.

Sixthly, the rapid evolution of internet-based automotive technologies, notably smart connected vehicles, sets forth new demands, challenging traditional marketing paradigms and necessitating transformative adaptations in marketing strategies.

Seventhly, the maturation of the automotive aftermarket, particularly the service and used car segments, emerges as pivotal avenues for profit amplification within the industry value chain.

Eighthly, "Made in China 2025" stands as a guiding principle for executing the strategy of bolstering national manufacturing, offering a rare window of developmental opportunity for the automotive sector.

Under the influences enumerated above, the automotive industry's impelling factors are poised for discernible shifts. Over the coming years, at least five significant market opportunities are anticipated within the automotive sector.

Foremost among these is the burgeoning expression of individuality within the consumer market. The emergent generation of consumers avidly pursues fashion trends, presenting ample opportunities primarily within the passenger car domain.

Secondly, conspicuous divergence characterizes regional market dynamics. While the first and second-tier markets boast sizeable scales but exhibit subdued growth due to evident limitations such as restricted acquisitions and usage, the third and fourth-tier markets manifest brisk growth potential with significant untapped market expanses.

Thirdly, there's observable scalability in the logistics domain across urban, intercity, and urban-rural sectors, concomitantly fostering group-driven developments within industries such as logistics.

Fourthly, there's a resurgence in overseas markets, presenting vast market prospects. The advancement of the "Belt and Road" strategy is accelerating China's industrial expansion overseas. At the inauguration of the "Belt and Road" Summit yesterday, President Xi announced a substantial injection of 100 billion RMB into the Silk Road Fund, encouraging financial institutions to engage in RMB-based overseas fund operations, amounting to 300 billion RMB. The China Development Bank and Export-Import Bank have sanctioned specialized loans amounting to 380 billion RMB.

Fifthly, the entry of new energy technologies into a fresh phase, coupled with an escalating consumer acceptance of these products, signifies the cumulative effects of policies fostering the evolution of new energy vehicles into a new developmental epoch.

Within such a policy and market development backdrop, recent years have witnessed a concurrent elevation in sales volumes and market shares for independent brands. In 2016, sales of independent brand passenger cars surged by 20.5%, with market share escalating by 2 percentage points, culminating at 43.2%. The first quarter of this year witnessed independent brand passenger cars registering sales of 2.72 million units, a 6.5% year-on-year growth, elevating the market share to 45.7%, an increase of 0.8 percentage points from the corresponding period last year. Pioneering entities such as Changan Automobile, Great Wall Motors, Geely Auto, GAC, SAIC, among others, have set exemplary benchmarks for JAC Motors, warranting a reflective learning process.

To consistently ascend, for independent brand automobiles, primacy is placed on survival. Survivability in the elimination phase precedes development, aiming to establish eminence and ascend as a premier brand. The bedrock for this ascension lies in sustained innovation—steadfast pursuit of technological advancements to drive iterative research and development; steadfast adherence to the artisan spirit to extend the boundaries of quality; and a steadfast commitment to introducing novel products and consumer experiences for enhanced brand perception. This constitutes a trajectory propelled by technological innovation and stands as the unequivocal path for JAC Motors to forge ahead and ascend.

The foundational tenet for the future development of JAC Motors can be encapsulated in eight pivotal words: "transformation, elevation, progression amidst stability." It denotes the perpetual adherence to the guiding principle of "centering on profitability, guided by strategy, propelled by development, fueled by change." It underscores the steadfast commitment to operational principles that emphasize "effectiveness, technology, quality, distinctiveness, and scale." The focal pursuits revolve around "uplifting the brand, pioneering technology, platformizing products, iterating development, streamlining manufacturing, and internationalizing the market." A profound and relentless push for four transformative shifts is paramount: transitioning from competitive orientation to customer-centric focus, from technology-oriented to value-centric approach, from manufacturing-focused to marketing-centric paradigm, and from sales-focused to service-oriented mindset. A concerted effort will fortify the commercial vehicle sector while vigorously propelling the development of new energy vehicles. Specifically, this necessitates upholding six steadfast principles.

Firstly, unwavering commitment to customer orientation—embarking from the core value of target customers and constructing a value-driven ecosystem encompassing value discovery, design, realization, delivery, and sharing. Establishing a comprehensive ethos, system, methodologies, and benchmarks for customer satisfaction, persistently elevating customer satisfaction, thereby fortifying customer loyalty.

Secondly, resolute pursuit of technology-driven strategies—channeling efforts towards energy efficiency, environmental conservation, safety, intelligence, and comfort. Augmenting research and development endeavors concerning pivotal technologies. Strengthening the proliferation and utilization of energy-efficient and environmentally friendly technologies and equipment, vigorously cultivating the realm of energy-saving and new energy vehicles, orchestrating a cohesive progression encompassing energy-efficient, new energy, and smart-connected vehicles. Allocating 3% to 5% of annual sales revenue towards research and development to invigorate future prospects.

Thirdly, perpetual emphasis on quality benefits and the vigorous propagation of a manufacturing ethos. Continuously amplifying product prowess, with a particular emphasis on reliability and durability. Leveraging the brand as a conduit for enhancing benefits—our relentless focus on reliability research for over three years has yielded significant results, evident in our existing vehicle models.

Fourthly, unwavering commitment to channel advancement. Adeptly aligning with consumer trends and the evolution of mobile internet. Particularly in response to the recent issuance of new automobile sales management methods, zealously innovating in models and service methodologies, systematically enhancing terminal marketing capabilities, persistently elevating collaborative levels with manufacturers for mutual benefit.

Fifthly, resolute commitment to open development—bolstering international cognizance and constructing a global operational framework. JAC Motors currently boasts 19 overseas factories and 2 R&D centers, fervently propelling structural adjustments in product and market dynamics, transitioning progressively from mere product exports to the exportation of capital, technology, and brand. Our operations now span across 130+ countries, with JAC Motors exporting nearly 20,000 units of various vehicles in the first quarter of this year, securing a commendable third position in the industry. Among these, light trucks rank second, heavy trucks fifth, and passenger cars third in exports. In recent years, JAC Motors has astutely capitalized on the developmental prospects of the "Belt and Road," witnessing a significant surge in export volumes among the 60+ countries along this route. As per our plans, we aim to exceed a 15% overseas sales proportion by 2020.

Sixthly, unwavering commitment to structural adjustments—continually consolidating dominance in commercial vehicles, expeditiously scaling up the passenger vehicle domain, and vigorously expanding within the new energy market. Strengthening breakthroughs in emerging overseas markets, urban logistics markets, and domestic third- and fourth-tier opportunity markets, nurturing the automotive service industry, and fostering new growth nodes.

Through the concerted implementation of these six strategic focal points, JAC Motors will perpetuate its trajectory towards elevating the brand image. It aims to orchestrate a holistic developmental trend, with the automotive whole vehicle business at its core, flanked by the automotive parts and automotive service industries. A synchronized growth narrative encompassing passenger cars, commercial vehicles, and parts businesses, concurrently evolving within both domestic and international markets. We aim to ensure, by the end of 2020, that traditional energy-efficient automotive products attain internationally advanced technology levels, new energy automotive products match global standards, and smart connected vehicles reach staged autonomous driving objectives. Our aspiration is to strive towards becoming a comprehensive automotive enterprise group, surpassing the million-unit output mark by the end of the 13th Five-Year Plan, dedicating efforts and contributions towards the robust emergence of Chinese automotive brands!

(Compiled based on on-site shorthand, pending personal review)

2017-11-01 13:00:39