The Coronavirus Demand Challenge Awaiting China’s Auto Industry
COVID-19 could drag Chinese passenger vehicle sales 5% below precrisis expectations in our mildest scenario, 10% if there is a heavy impact and 23% in the worst case.
If there is no resurgence of the pandemic in China, demand shocks are likely to be the biggest managerial challenge for the sector.
Priority actions for carmakers include systematically improving operational efficiency, redefining pricing strategy and mastering online sales.
Demand shocks outweigh supply challenges
Three scenarios for a recovery
There’s the ongoing economic development of China; rising household incomes should continue to stimulate car sales over the longer term.
Given the auto industry’s national importance, government policy is likely to remain friendly.
The easing real estate market means that households will face less pressure to pour all their wealth into property.
How OEMs can adapt to COVID-19’s longer-term impact
Systematically improving operational efficiency: OEMs will already be planning or implementing a host of measures to both improve cash flow and cut costs. These crisis responses are likely to be even more effective if they feed into a strategic and long-term overhaul of operations. That means digitally transforming processes such as supply chain management and using data to make faster and more objective decisions.
Supporting suppliers and relaxing dealer targets: While top suppliers are likely to be in robust shape, others might be facing cash flow issues. Proactive communication and risk assessment is key. Solutions might include specialized supply chain finance and earlier settlement. If dealer targets are now unrealistic, they need to be relaxed, but dealers should fill any slow days with training, operational refinements and planning for the recovery.
Redefining pricing strategy: When the rebound occurs—be that in the second quarter, third quarter or even later—pricing is likely to come under pressure as dealers scramble to destock. Brand by brand, model by model, OEMs will need to weigh how much discounting they are willing to tolerate to secure volume and market share, taking into account the need to maintain brand positioning and short-term profitability.
Mastering online sales: Chinese consumers have turned to online shopping to get around lockdowns. Some of this accelerated shift away from physical stores is likely to be permanent—and not just for consumer staples. OEMs and dealers already are investing more in online marketing as well as pickup and home delivery services. The next step is to redesign the buying and after-sales processes to exploit the full potential of digital technology.
Raymond Tsang
Co-leader of Bain's Asia-Pacific Performance Improvement practice
Bruno Zhao
Head of Bain's Greater China Advanced Manufacturing & Services and Energy & Natural Resources practices
Ralf Kalmbach
Partner based in Bain's Munich office
Helen Liu
Partner based in Bain's Shanghai office
最新评论
推荐文章
作者最新文章
你可能感兴趣的文章
Copyright Disclaimer: The copyright of contents (including texts, images, videos and audios) posted above belong to the User who shared or the third-party website which the User shared from. If you found your copyright have been infringed, please send a DMCA takedown notice to [email protected]. For more detail of the source, please click on the button "Read Original Post" below. For other communications, please send to [email protected].
版权声明:以上内容为用户推荐收藏至CareerEngine平台,其内容(含文字、图片、视频、音频等)及知识版权均属用户或用户转发自的第三方网站,如涉嫌侵权,请通知[email protected]进行信息删除。如需查看信息来源,请点击“查看原文”。如需洽谈其它事宜,请联系[email protected]。
版权声明:以上内容为用户推荐收藏至CareerEngine平台,其内容(含文字、图片、视频、音频等)及知识版权均属用户或用户转发自的第三方网站,如涉嫌侵权,请通知[email protected]进行信息删除。如需查看信息来源,请点击“查看原文”。如需洽谈其它事宜,请联系[email protected]。