Dialogue between dude and pal (season 5)
“It’s the time for Siege the city from Suburb” ---- Discussion about Automobile Service in 4th & 5th Tier city.
Tan Hao (Dude)
$1 Culture, Chief Editor
Xie Yu (Pal)
Chairman of Yasn International
2019 is an inflection point for industrial development
Dude: Hey Pal, look like you lose some Weight.
Pal: Hell Yea, we worked really hard here. YasnBon Chepinbao and CIAACE show are all on fire. No one can leave behind.
Dude: So, what would you say about the “PANG DA Automobile Trade Group bankruptcy recombination”, which is all over the internet?
Pal: It meant to happen, give or take. It's a stereotype case that enterprises seek change in adversity. But, still, the key issue is with PANG DA Group’s managerial problem. For the past decades, auto industry in China has been wildly outgrowing, extensive management, chaos after another in operation, as far as we see, business collapse and asset reorganization is good for whole industry.
Dude: It also presage that aftermarket industry is facing reshuffle.
Pal: Feel the same. March this year, When I was in Tokyo show, there is a group of data been released, 40% of store in aftermarket industry has been weed out of market or on the process of major adjustment every year.
Dude: Over a million aftermarket shop, repair shop and service shop, including 80 thousands of them are Large repair shop（including 4S shop）, most of them are outgrow, acceleration on phase out are inevitable。
Percentage of service that provide by Store
Pal: We found out most of the stores have managerial problems， when Yasnbon give them on site training. This is terrifying. Stop complaining about reduce car owner spending power, price transparency，economy. Just focus on themselves, do some Introspection.
Dude: Market size is expanding anyway, 2018, 240million vehicles, estimate 600million automobile possessions.
Pal: how long would industry reshuffle last?
Dude: At least 5 years,
Pal: Let it break all its fury! Major adjustment, Shup down, suspend operation, merge with others or shift to different line, if it’s all done within 3 years, will be good for the industry, if more than that, would be a long and surfer process, everyone trapped in the mug of price war.
Dude: Every corporation has some introspection to do internally and externally, don’t take any chances, it’s difficult, need external help, like management consulting company， Yasnbon……
Pal: Dude, Yasnbon have reach to hundred thousands of stores, with more “down to earth” sharing and communication, I believe it will help a lot.
Dude: if we Break down 600 million cars, very interesting, 34 1st tier city, each city have car procession around 1.2 million, 661 tier 2 city car procession each around 600 thousand，2882 tier 3 city each around 50 thousand, 41169 tier 4&5 city, each around 2000.
Pal: so far, amount of aftermarket shops will each over a million, fast repair and maintenance shop are the majority of them, 52.9%, 2nd place is repair shop, 17.7%, rest of them are wash，maintenance，dero. In the future, repair shop will be phase-out, fast repair & care, wash, care, décor will be the ultimate type of business.
Dude: “Connect cities, link to store” that Yasn initiated, is try to walk the final steps to tier 4 & 5 area?
Pal: exactly, we worked really hard on this, Yasnbon, Chepinbao, and dozens of tours around the country all targeting tier 4&5 city.
Look, Beijing, shanghai, Guangzhou has the largest aftermarket market size, Guangzhou 25 billion, Beijing 24.4 billion, Shanghai 22.9 billion, tier 1 city have largest market size, also the most rational consumption market, so, more and more tier 4&5 cities is where the future are, has potential of 1 trillion.
Dude: Why factories and distributors have such hard time covering tier 4&5 cities?
Pal: Tough question. If factory try to cover thousands of city, what are their marketing cost? If there is anything happen to provincial agents, out of business or out of reach, factory will never to getting back to the business network they use to have. It’s a dirty job. Yasn will bring in county-level leave distributor. Manufacturers can just bring their product, sells pitch and come to the show.
Dude: Every year every show is kind of “Few joys, many sorrows”. It’s because they are not prepared, product is not creative enough, sells plan wasn’t pragmatic enough, whole industry is oversupply.
Pal: Yes, I believe, more importantly is due to they didn’t do enough digging on the demands of 4&5 tier city market, also we need to nurture customer. After all, customer in tier 4&5 city didn’t have enough knowledge and understanding for cars and aftermarket, they need to be educated, just like what we did to first tier city years ago.
Dude: Pal, what do you feel about CIAACE Guangzhou show on July 1st?
Pal: Dude, I only sold 1 commercial. It’s the 4th year of Guangzhou show, after all we laid pretty good foundation，in the next 3 year, our focus is still on “connect cities, link to store”, Yasn will assemble 3000 city distributors, 300 thousand flagship shops, let them grow with Yasn.
Dude: Pal, work hard！
Pal: Work hard!