Technological turnaround and more efficient sales structures – established OEMs must be flexible

Since the mid-2000s, Chinese OEMs have repeatedly made efforts to gain a foothold in the European automotive industry. The Landwind and Brilliance brands are certainly among the best-known examples. In recent years, Chinese players have once again made an appearance and ventured into Europe. Well-known names today include Aiways, Lynk&Co and MG, among many others.
This time, however, the signs are different. Whereas in previous attempts, the head start in know-how and experience of the established German car manufacturers, based on the further development of classically powered vehicles over almost 100 years, was decisive for the failure of Chinese newcomers, the current change in the automotive industry is causing this head start to shrink. This is being driven by the increasing focus on future topics such as electromobility, connectivity and new mobility solutions.
The expertise required to tackle the aforementioned future topics and also the production of increasingly important new components (batteries, chips, sensors) and software solutions (infotainment, networking) is already located in China.
Apart from the purely technological change in the automotive industry, however, there is another important aspect to consider – how are Chinese OEMs positioning themselves in terms of sales in order to gain a foothold in the German market?
If you take a closer look at the currently best-known Chinese manufacturers in this country, you can identify different sales strategies.
In addition to rather inconspicuous cooperations with local importers and joint ventures with established brands in order to be able to fall back on existing distribution networks, the opening of flagship stores and direct online sales are also among the methods used by Chinese OEMs to bring their products to customers on the German and European markets. In addition, the promising Chinese manufacturer Aiways even covers areas of after-sales through a cooperation with its partner ATU in order to be able to offer customers comprehensive services. What these strategies have in common is the use of enormous cost-saving potential compared to the traditional development of own sales networks. This could also be an example that new challengers will follow in the future.
WHAT CAN OEMs already on the market learn from this?

On the one hand, the young Chinese brands that are attempting to enter the European and German markets today are drawing on the lessons learned from previous attempts by other manufacturers that failed. On the other hand, what is probably much more decisive in the current situation are the circumstances described above, which have changed considerably compared to the situation 15-20 years ago and to which the established manufacturers in Europe and Germany must also adapt.
Specifically, this results in the task of being able to predict future trends for the domestic market at an early stage and also to create the basis for being able to offer future products competitively. Key issues in this context are battery production and in-house IT solutions.

Specifically, this results in the task of being able to predict future trends for the local market at an early stage and also to create the basis for being able to offer future products competitively. Key topics in this context are battery production and in-house IT solutions.

Through pure online sales or cooperation with established OEMs, Chinese manufacturers generally do not need to set up their own sales network in the European markets and can therefore achieve considerable cost savings, whereas the sales costs for German manufacturers amount to up to a quarter of the purchase price. In principle, potential cost savings should always be examined in the light of the company’s own quality standards. Nevertheless, this forces local OEMs to refine their sales strategies or completely rethink them in order to avoid being overtaken by the new competition.

Lambert Görsdorf

Consultant

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