Not long ago, there was news from Xiaopeng. Some media reports say that Xiaopeng is going to take action on its own directly-operated stores and transfer them to dealers. At first glance, something doesn’t sound right. Is Xiaopeng planning to break away from the new force? After all, the direct sales model is a unique label of Internet car manufacturers. If you look at companies like Tesla, Ideal, and NIO, all of them are proud of their directly operated stores.
Isn’t it true that only traditional car companies like to do this old-fashioned thing like dealers?
But in Brother Neck's view, this is definitely a good thing, and it just shows that Xiaopeng knows how to sell cars well.
The first thing to make clear is that Xpeng is not 100% directly operated. As early as 2019, Xpeng opened dealer cooperation, but direct sales have always been the majority. By the beginning of this year, the ratio of Xpeng direct stores to dealer stores was 7:3.
This time, Xiaopeng is going to cut down some direct stores with poor performance, and then increase the number of dealer stores, changing the ratio to 5:5, or even more dealer stores.
So it is not about giving up direct sales, but engaging in both.
Why do I say it is a good thing? Because these two models have their own advantages and disadvantages, they can complement each other when combined.
When car companies started selling cars, everyone knew that there was only one dealer model, which is what we call 4S stores. This is also the most mainstream sales model now.
Dealers such as 4S stores buy cars wholesale from car manufacturers and then resell them to consumers.
The benefits of this are obvious. Car companies are only responsible for building cars, and do not have to spend cost and energy to find customers or open stores. Sales, maintenance, and repairs are all handled by dealers.
Dealers who sell cars also make a lot of money. Some leading companies that are relatively good have annual revenue of hundreds of billions.
But this model has a painful problem. In order to sell more cars, dealers offer different discounts. It is normal for the same car and the same configuration to have different prices in different 4S stores.
As a person who wants to buy a car, I don’t mention shopping around (brands) before buying a car. After finally choosing a model and configuration, I still have to shop around (dealers). It’s tiring just thinking about it. . .
With opaque prices and inconsistent services, everyone has long been dissatisfied with this sales model.
At this time, Tesla took the lead in developing a direct sales model: unified pricing across the country and transparent after-sales services. I won’t talk to you about those little Jiujiu.
The key is that for new brands, the direct sales model can promote themselves well.
Dealers' 4S stores were usually opened in automobile towns on the edge of cities. At that time, the automobile towns were filled with powerful fuel vehicles. If Tesla also goes there, squeezed among these brands, it may take a long time for the public to accept it.
Therefore, in order to build a reputation, Tesla opened all its stores in shopping malls. Wherever there is a lot of traffic, drive where you want to highlight yourself.
The sales staff in self-operated stores are also their own employees. They not only sell cars, but are also responsible for promoting their own brands. This is also an important difference between direct sales and dealerships.
When you go to a traditional 4S store, the salesmen have only one purpose for you, which is to let you buy a car; but when you go to a direct-operated store, even if you don't buy a car, the salesman is willing to introduce you to what kind of company it is and what its product concept is.
Brother Ning has a deep understanding of this aspect. Once at a Tesla store, the salesperson introduced the company's vision to me while chatting. . .
Therefore, after Tesla, the new power brands that have just debuted have all launched direct sales models. To this day, if you go to a shopping mall, there are more stores selling cars than mobile phones.
However, the direct operation model is not always fragrant.
When you first enter the game, the more directly operated stores the better. But when the number of stores reaches a certain level, the cost-benefit issues of these stores have to be considered.
The store manager of a supermarket told me that the annual rent for their store is more than 3 million yuan, which cannot be earned by selling cars. Adding in the store's manpower and other costs, it is simply impossible to make ends meet.
"No supermarket store like ours makes money, everyone is losing money."
According to some data, a new brand needs nearly 1 billion in funds to cover more than 200 major cities across the country. This is only the initial cost, and the continued operation in the later period will be a bottomless pit.
Even Tesla is adjusting the layout of its directly operated stores.
In 2013, Tesla opened China's first store in Beijing, the Beijing Parkview Parkview Green. Last year, Tesla took the initiative to close this store.
According to statistics from Sohu Auto, from September 2021 to December 2022, Tesla’s experience stores in the four major cities of Beijing, Shanghai, Guangzhou and Shenzhen have shrunk from 60 to 40.
Even Tesla cannot handle so many stores. It is conceivable that Xpeng needs to take action on the sales side. Alas, at this time, the benefits of the dealer model are revealed.
Each dealer is like a reservoir, which can share the pressure of directly-operated stores for you. You don’t need to consider stores and sales costs.
Moreover, dealers bring stable cash flow.
Generally, when a dealer picks up a car, hundreds or even tens of millions of dollars will be sent to the car company in minutes. The car company collects the money, but does not have to pay it to the parts suppliers immediately. There is at least a few months or even a year's accounting interval.
In this way, the car companies that use the cash flow from prostitution can do more with the money.
In addition, for car companies, dealers can shoulder the risk of inventory for you.
You must know that even if it is 100% direct sales, there is no guarantee that it will have no inventory at all. The price of the new Model 3 has increased by RMB 28,000 compared to the old model. Many people think that Tesla needs to clear out the inventory of the old model before lowering the price.
More importantly, having multiple people help you sell your car will be somewhat helpful in increasing sales. After all, starting from the "Waterloo" of G9 last year, Xpeng's sales have been sluggish for a long time.
These benefits are simply not too good for Xiaopeng.
In order to understand Xiaopeng's operation this time, Brother Neck visited some Xiaopeng stores and chatted with some relevant people. I found that Xpeng’s purpose this time is very simple – to open up the third- and fourth-tier markets.
You know, Xpeng’s sales now basically come from the first and second tiers.
Taking the popular model P7 as an example, according to Gasgoo statistics, from January to August 2022, the top 10 sales cities contributed 52% of sales.
In these cities with good sales, Xpeng's outlets are close to saturation.
Xpeng's official website shows that in Guangdong and Zhejiang, where first- and second-tier cities are densely populated, almost every prefecture-level city has a Xpeng outlet; in places like Guangxi and Anhui, only two or three cities have outlets.
A staff member of a Xiaopeng self-operated store in Zhejiang told Brother Neck:
"In first-tier cities, Xiaopeng basically does it by itself, and more than 90% of its stores are self-operated; while in second-tier cities like Ningbo and Shaoxing, the ratio between self-operated and dealers is almost half.
Now in the places where sales are good, the slots have basically been allocated. There may not be many areas open to franchise in Zhejiang Province. "
Another Jia Ge who works at a Xiaopeng dealer said that those who can get these good positions are without exception the top few large dealer groups.
The dealer where Brother Jia works joined Xpeng four years ago. What’s interesting is that this dealer is currently operating a local supermarket store that does not make any money.
According to Jia Ge, their company’s purpose of keeping this supermarket store is actually to maintain the relationship with Xiaopeng, because they have profitable stores in other first- and second-tier cities.
After being saturated in the first and second tiers, Xpeng currently wants to expand to third and fourth tier cities.
Brother Neck directly consulted Xiaopeng’s staff in the name of opening a store, and the other party said: Now we are mainly focusing on third- and fourth-tier cities. In small and medium-sized cities that do not have outlets, you can apply for a try if you do not meet the official threshold. We will conduct multiple rounds of evaluations and then decide whether to let you do it (store).
Conditions set by Xpeng for dealers
In order to attract dealers to join, Xiaopeng has also provided some policy support, such as subsidies for opening stores.
And because of the national unified pricing policy, dealers earn commissions when selling Xpeng vehicles. People from Xiaopeng said that if the quarterly sales volume reaches the target, there will be rebates. Now dealers can get an average commission of 6 points, and the highest can get more than 9 points.
A former employee in the sales department of a car company told me that this commission ratio is a good level in the industry.
In addition, Xiaopeng has also loosened up its after-sales service.
In fact, for most dealers, selling cars is not their main source of making money. After-sales business is the bulk of profits, which often accounts for 70% of a 4S store's total profit.
For new energy vehicles, after-sales service is even better. Because current car warranties have a lot of restrictions, you can only go to official after-sales outlets for maintenance and car repairs.
Previously, Xiaopeng's dealers had to start from supermarkets, and then they could gradually get into after-sales service. Now, Xiaopeng has released the authorization for 4S stores that integrate sales and services. Of course, if you want to do Xpeng’s after-sales service, you must first sell cars to it.
In third- and fourth-tier cities, Xiaopeng also knows that selling cars to dealers may be difficult at first.
So they allow you to carry out light capital operations first. Instead of opening a large 4S store, you can open a small store first. At the same time, after-sales maintenance can also be operated together with other brands, which means that while you are repairing Xpeng cars, you can also repair other vehicles, and both parties will do business together.
Brother Neck learned from an industry insider that this kind of operation is not common among new power brands.
As far as these open policies are concerned, I think there is no problem with Xpeng's idea of going down into the market, because unlike Weilai or Ideal, the unit price of its models is not that high.
Some time ago, it also had a PY with Didi, aiming to seize the market at the 150,000 level.
For Xiaopeng, the sooner the channel is sinking, the better.
However, according to my understanding, some dealers are not very willing to go to the third and fourth tiers.
Jia Ge (pseudonym) said that his company will basically not go to third- and fourth-tier cities to do Xiaopeng's business, because a 4S store has a high investment. In those small places, it may not sell 20 vehicles a month, making it difficult to make money.
But no matter what, the set of opening policies launched by Xiaopeng is a positive signal.
As for whether to go for direct sales or distribution, it just needs to be dynamically adjusted according to the current situation. There is essentially no difference between these two sales models. Regardless of whether the cat is white or black, what matters is whether it can catch mice.
Fortunately, during this period, Xiaopeng is also undergoing some positive changes.
In January this year, He Xiaopeng invited Wang Fengying, the former second-in-command of Great Wall Motors. This traditional car person is also helping Xiaopeng gradually get on the right track.
Let me give you an example. Xpeng, which emphasizes intelligence, does not even provide you with ACC adaptive cruise in the entry-level model of the G9 launched last year.
This year, we see that whether it is the facelifted P7i, the 2024 G9, or the blockbuster G6, the model definition has been much better. There are not so many complicated and difficult-to-choose configurations, and the advantage of product strength has also increased.
This adjustment of sales channels was also made by Wang Fengying.
In the past two days, media reports have revealed that Xiaopeng is conducting an internal anti-corruption campaign in the supply chain and that the head of the procurement department has been suspended.
These signs indicate that Xiaopeng has found its own rhythm and is slowly getting better.
Therefore, Xiaopeng’s sales have also increased. According to data disclosed by Weibo blogger @ Sun Shaojun 09, Xiaopeng’s orders in September were close to 30,000.
It seems that in the remaining few months of this year, Xiaopeng is really going to have a sharp phase.