The long arm of the ownership experience
We’ve been having discussions lately on the ability of the newer car brands to handle the ownership experience that is expected from more traditional or legacy brands. Specifically, do they or can they appropriately handle the demands while they are pushing cars out to people as fast as they can.
First we need to look at the structure, because these newer brands have a distribution structure somewhat different from the legacy brands and organizations. For one, some are owned or controlled from a regional or global office while others have local distributors or sellers. This is important to note because we have seen many brands that have shifted from having a local distributor/importer to handling it in-house. This is something we have also seen in the luxury industry, so it is nothing new. But the speed at which it happens is a bit different.
There is an argument that having everything controlled by the mother company is good for the consumer, especially because there is direct connection and communication tomorrow and with supply chains and such. MG explained for example that they have the ability to position parts and components in different places both local and in ports ready to ship from abroad. So if there is a sudden need for certain things, it is more shifting than ordering. For a comparison from another industry, when a large luxury company chose to close its Philippine office (a serious black eye for the country, by the way) and go back to a distributor relationship controlled from Singapore regional, the local market lost the ability to quickly pull pieces and parts. Meaning, they didn’t have as much allotment of what they wanted to sell. The reverse of this though, again as seen clearly in the luxury market, is that you lose a lot of the local knowledge and feel.
So there is an argument that the best support for after-sales service may come from the brands that have the more direct connection to the main company. But that isn’t necessarily the case, and indeed we are seeing the opposite with some of the brands that keep flaunting their sales figures. They just aren’t keeping up.
Some of this may be due to the somewhat unusual situation the local automotive industry finds itself in. We have seen brands move from local to regional to global control increasingly quickly, and this can have a negative effect on the long term planning needed to properly plan for and create the after-sales departments needed in the more traditional and longer-lasting structures. Why build for the future when it may just not be there?
This is where we learn from the bankers. When they choose how to back the newer car companies and distributors, they aren’t necessarily looking mainly at the brands. They are looking at the businessmen. They are looking at who they are and how they handle the realities of this new market and these new brands. Which makes a lot of sense. They are treating the car industry more like other industries that can change brand connections and contracts quickly. This is similar to what I would say when people would ask me what watch brands they should bring in. I tell them that their relationship with the brand company may be the key far more than which brand is hot at the moment.
This is why some of the companies with the less traditionally automotive bent may well be in the best position to handle things. Companies like UAAGI, connected to brands like Chery and BAIC, and Luxuriant, connected to GWM and Haval, have their business base in things like industrial machines or pre-owned work trucks or peripheral industries like tires and such. Since they are more used to the realities of brand movement than those that are used to decades of relationships, they may well be already have the experience and structure needed to handle the quicker industry changes. Also, they can bring a much more hands-on personal understanding of what the market is looking for, and make the changes more quickly if they are needed.
We completely understand and appreciate the commitment demanded by the legacy brands and organizations. They have wisdom and depth and understanding on many levels. At the same time though, as we said in the last column, the speed of change is changing. All this should be positive for the consumer. More choices to be had, more competition to push the market. It may be confusing for a while, and challenging as we will for sure be seeing brands leave the market and leave those that bought the abandoned brands a bit apprehensive. We already have. But buyers old and new look for more now from the car companies, and the truth is that they feel they have better chances of getting that nowadays.
******
Get real-time news updates: inqnews.net/inqviber
