Experts doubtful of new car sellers

As retail giants Suning and Gome foray into car sales, most analysts and auto industry insiders wonder if such alternative channels would succeed.

Luo Lei, deputy secretary-general of the China Automobile Dealers Association, said car supplies could be a problem.

"A foremost problem that confronts Suning is - where would it get car supplies?" said Luo in an interview with Auto Business newspaper.

"You know mainstream carmakers would not work with Suning while ignoring their traditional sales network."

Among others, Mercedes-Benz, GM and GAC Motor said they do not have any cooperation agreement with Suning yet.

Luo argued that Suning's car sales model is not new. "It has existed for a long time, like the Yayuncun car market in Beijing. They are, in fact, unauthorized markets."

Li Jinyong, chairman of Zhonghai Tongchuang Group, which has car sales as one of its major businesses, said carmakers may not want an extensive sales network with a strong bargaining power.

"They will not forget the lesson of home appliance producers, who first relied on Suning and Gome and ended up having to work with them."

Cui Dongshu, secretary-general of the China Passenger Car Association, said even some dealers may sell their cars to Suning, but that would make it difficult for Suning to make money.

"So if Sunning is offering the same prices as these dealers, it is losing money."

Besides, it would be hard for Suning to offer sales experience or after-sales services like traditional dealers.

"Imagine if you want to have a test-drive, they may not be able to arrange it because they are often located in busy downtown areas. And I do not think their salesmen can explain tech details. Yes, they can hire such staff, but that means a lot of time and a lot of money."

On Suning's intention, Cui said that brick-and-mortar retail is declining in China, with car sales being one of the few exceptions, so Suning wanted to give it a try.

"Some people had experimented with the model of car supermarkets but it did not beat the 4S model, which only grows stronger," said Cui. The 4S model refers to sales, spare parts, service and survey store model.

He said the model of dealer authorization has a long history internationally and as cars are probably the most expensive household purchase, customers have more trust in authorized dealers.

Yale Zhang, managing director of consulting firm Automotive Foresight, said even if car sales still make some money, Suning's logic appears to be flawed from the very start.

John Zeng, managing director of LMC Automotive Shanghai, said Gome's model is similar to online car cars at Alibaba's Tmall, but it does not change the traditional sales network at all.

lifusheng@chinadaily.com.cn

(China Daily USA 08/14/2017 page14)