AutoBeta(AutoBeta.net)09/05 Report--

Chen Anning, CEO of Ford Motor Co., revealed in an interview that the company has cancelled its plan to create a unified national sales company in China, Reuters reported. The plan has exacerbated distrust of the company by Ford's joint venture partners in China and led to a sharp drop in sales in the world's largest car market.

Subsequently, Ford issued a statement on Sept. 5, saying that the Reuters report that the company "abandons its plan to integrate sales channels in China" is not true.

In June last year, Ford announced that in order to improve channel efficiency, it had decided to unify the three sales networks of Ford China, Changan Ford and Jiangling Ford, so that consumers could buy all Ford products at any of Ford's 4S stores. This approach is also considered meaningful to improve the operational efficiency of its lossmaking Chinese operations and is standard practice in most other markets.

But the plan ignores the local reality. Chinese carmakers, who usually maintain joint ventures with 50 per cent stakes in foreign carmakers, do not want to lose control of sales decisions.

Ford's imported models are mainly sold in the channels of Changan Ford and Jiangling Ford, so the main difficulty of "three nets in one" lies in the dealers between Jiangling Ford and Changan Ford. Changan Ford and Jiangling Ford have their own emphasis on business. Among them, Changan Ford's products are mainly passenger cars, after years of development, the product series has covered the mainstream passenger car plate, while Jiangling Ford is mainly for commercial vehicles, passenger cars only have a minority off-road SUV road shaker.

Under the leadership of Ford China, Jiangling Ford has created the latest product, the leading sector, which will be the first test product of "three nets in one". After the listing of the leading sector, it will be sold not only in Jiangling Ford's 4S store, but also to some Changan Ford dealers.

But Jiangling Ford dealers believe that Changan Ford dealers with a stronger system will seriously affect their own market. Because, compared with Jiangling Ford, Changan Ford's dealer financial strength, car operation culture and experience and customer accumulation are generally better than Jiangling Ford.

It is also difficult for Jiangling Ford dealers to obtain the license of Changan Ford products. First of all, Jiangling Ford dealers are mostly distributed in third-tier and third-tier cities below, the store scale is generally small, working capital is limited, it is difficult to meet the authorization conditions of Changan Ford. And Changan Ford will not launch products that can be "shared". Changan Ford's passenger car management and 4S store infrastructure are of a higher level than Jiangling Ford, and it is unlikely to devolve models to Jiangling Ford dealers.

In the later stage of the listing, the preferential rate of Jiangling Ford dealers will be greater than that of Changan Ford, and the after-sales working hours of Changan Ford is also relatively high.

The domestic car market has entered a rare winter, how to improve quality and efficiency at the sales end has become a problem that every car company must consider. At present, Ford is not the only one facing the problem of channel change. Previously, several brands of two domestic joint ventures have encountered difficulties in connection with the grid, including Japanese Suzuki Motors, which announced its withdrawal from China in 2018. The three-in-one plan almost ran through its entire journey in China, but ended in a full withdrawal.

With regard to the difficult problem of grid connection, industry insiders pointed out that grid connection is not as simple as taking new models to the store to sell. The objective fact is that compared with passenger cars, there is indeed a large gap in the software and hardware level of commercial vehicle dealers. Lack of higher-level sales environment support for passenger cars. As a result, it is easy for passenger car dealers to apply for commercial vehicle sales rights, but it is difficult for commercial vehicle dealers to successfully apply for passenger vehicle sales rights if they do not upgrade their software and hardware. Whether Ford or other brands trying to integrate channels, they all face such elimination and upgrading in the integration of channels.

Many foreign carmakers have two or three partners in China, each with different marketing and distribution strategies. Ford is also the only known company to try to merge mainstream car sales channels.

Although Ford has announced that it is abandoning its integration plans in China, Ford's sales have fallen like never before for a large global carmaker in China. After peaking at 1.08 million in 2016, Ford's sales in China began to decline at the end of 2017, falling by nearly half to 504488 last year, according to the data.

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