Pressemitteilung
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München, November 2022
nnerhalb der 30 – 39-jährigen Kunden ist die Akzeptanz für Hersteller wie Aiways, BYD, Nio und Polestar hoch.
München, 17.11.2022 Die China Experten von Berylls Strategy Advisors um Soleiman Mansouri, haben gemeinsam mit dem Meinungsforschungsinstitut Civey eine Umfrage zur Akzeptanz chinesischer Premium-OEMs und ihrer BEV-Modelle bei deutschen Kunden durchgeführt. Die repräsentative Befragung fand unter den loyalsten deutschen Autokäufern, den Fahrern von Audi-, BMW- und Mercedes-Modellen statt.
Die Analyse zeigt, dass Aiways, BYD, Nio, Polestar und Co. durchaus Erfolgschancen haben. Denn unter den Premium-Kunden ziehen beim Autokauf etwa 25 Prozent chinesische Marken in Betracht. Das ist bemerkenswert, schließlich haben die meisten chinesischen Hersteller noch nicht mit ihren Marketing-/Kommunikationsaktivitäten begonnen. Die Bekanntheit der Marken und ihrer Modelle bewegt sich daher noch auf einem eher niedrigen Niveau. Eine Ausnahme stellt Polestar dar. Der Volvo-Ableger ist bereits seit 2018 stark mit Werbung und Medienauftritten im deutschen Markt vertreten.
Kunden die bereits Erfahrung mit einem chinesischen Fahrzeug haben, zeigen sich wesentlich aufgeschlossener für den erneuten Kauf. Offensichtlich sind sie von ihrem bisherigen Modell aus China, dem zurückliegenden Kaufprozess und dem Service rund um ihr Auto nicht enttäuscht worden und wollen den Newcomern vielfach eine zweite Chance geben. Vor diesem Hintergrund kommt dem zwischen BYD und SIXT angekündigten Geschäft, das einer großen Anzahl von Kunden die Möglichkeit bieten wird, chinesische Produkte aus erster Hand zu erleben, eine enorme Bedeutung zu. Insgesamt wird sich der Markt für Elektroautos mit den chinesischen Marktteilnehmern, auch dank solcher Kooperationen, stark verdichten.
Soleiman Mansouri, Associate Partner bei Berylls Strategy Advisors: „Der Kampf um die Aufmerksamkeit von Erstkäufern ist real. Vor allem deutsche Premiumhersteller wissen, wie wichtig es ist, die Altersgruppe der 30- bis 39-Jährigen, die so genannte Generation Y, als Erstkunden zu gewinnen.“ Denn üblicherweise entscheiden sich deutsche Käufer ab etwa 40 Jahren erstmals für den Kauf eines Premium-Modells. Und gerade bei dieser Alterskohorte sind die Vorbehalte gegenüber chinesischen Fahrzeugen besonders niedrig.
Allerdings können sich die eigenen Ansprüche der OEM aus China als grobe Stolperfalle entpuppen. Denn die mit Parwiz Torgull, dem Leiter des Customer Success Teams von Civey, gemeinsam durchgeführte Umfrage zeigt, wie wichtig den deutschen Kunden ein gutes Preis-/Leistungsverhältnis ist. So ist annähernd jedem zweiten Umfrage-Teilnehmer der Preis das Kaufkriterium Nummer eins. Erst weit abgeschlagen folgen technische Inhalte, wie große Reichweite oder Ladezeiten. Features, die in China ganz oben in der Käufergunst stehen wie digitale Funktionen, spielen bei der Mehrzahl der deutschen Käufer eine nur sehr untergeordnete Rolle.
Kunden, die bereits Erfahrung mit chinesischen Autos haben, geben abweichende Gründe für die Kaufentscheidung an. Bei Ihnen besitzt sehr wohl die Reichweite ein großes Gewicht, das Design spielt ebenfalls eine wichtige Rolle. Aber auch für sie ist der Preis an Platz zwei, ein ganz entscheidendes Kriterium für den erneuten Erwerb eines Autos aus China. Und genau in diesem Punkt sehen die deutschen Kunden die Chinesen bisher den deutschen OEM als überlegen an, während sie technische Unterschiede kaum wahrnehmen.
Die Studie legt damit nahe, dass sich jene Hersteller mit dem Erfolg auf dem deutschen Markt sehr schwertun werden, die ihre Produkte preislich auf Augenhöhe oder zu nah bei der deutschen Konkurrenz ansiedeln. Problematisch ist auch, dass sich die Modelle aus China zu wenig voneinander unterscheiden. Es existieren kaum Markendifferenzierungspunkte, weder technische und nicht einmal im Design. Den chinesischen Modellen fehlt das Besondere, das Kunden suchen, die bereit sind einen Premiumpreis zu bezahlen.
BYD-Chef Shu will dennoch bereits 2026 120.000 seiner Modelle in Deutschland absetzen, wie er am Rande einer Händlerkonferenz verlauten ließ. Andere Hersteller kommen mit ähnlich ambitionierten Zielen auf den deutschen Markt. Wie die Berylls Umfrage zeigt, treffen sie hier zwar auf Kunden, die ihnen eine Chance geben wollen. Dass es in kurzer Zeit aber derart viele sein werden ist unrealistisch, vor allem wenn das Angebot ausschließlich aus E-Autos besteht. Denn noch ist der deutsche BEV-Markt, 2021 wurden lediglich 365.000 E-Autos zugelassen, viel zu klein und wächst zu langsam, um den ambitionierten Zielen der chinesischen Anbieter gerecht zu werden. In der Folge müssen sich die Newcomer mit bescheideneren Stücken vom Kuchen zufriedengeben. Immerhin sind ihre Plätze am Kaffeetisch aber gedeckt.
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The mobility of the future will be electric – and the transition from conventional internal combustion engines (ICE) to battery-electric powertrains is progressing faster than expected. In 2020, battery-electric vehicles were forecast to account for 10% of global production volumes in 2025. Only two years later, this number has soared to 18%. Most vehicle manufacturers have once again tightened their exit strategies for the ICE. Individual OEMs are planning the complete electrification of their product portfolio as soon as 2025.
In light of increasing electrification, there remain numerous questions about the vehicle lifecycle, in particular the re-use of high-voltage batteries:
To answer these and other questions, we have developed the Berylls Re-X model (Re-cycling, Re-manufacture, Re-use), which forecasts the recycling requirements, investment requirements, and material cost development for 19 different cell chemistries globally until 2040.
In our view, battery recycling will gain enormous importance by the end of the next decade. Therefore, successful bottleneck management of material supply, building regional capacities, and the introduction of technical standards are the key factors, as our key findings show:
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n the last series of articles, the Berylls China team analyzed the Chinese OEMs’ bumpy market entry story into Europe.The focus of these analyses was a broader scope of understanding for successfully entering the European market and what currently hinders the Chinese OEMs.
From our perspective, all aspects of a successful Go-To-Market strategy require a customer-centric approach. And which customer is more challenging than the loyal German customer?
We conducted a detailed survey to understand the perception and expectations of German customers towards Chinese OEMs.
For this endeavor, Berylls and Civey have teamed up to provide a precise understanding of the German automotive-buying persona.
For the analyses, we have conducted two studies, each with one thousand participants and a side study with 60 Chinese OEMs’ experienced customers.
First study: asking the general German customer
Second study: on customers who own a premium car
Both groups are willing to purchase a foreign brand/model. While the first study is still ongoing, the latter had a field time of June 10 and September 15, 2022.
Further, we understand that the premium market consists of brands such as BMW, Audi, Mercedes Benz, and JLR. Although Mercedes Benz announced that it would focus on becoming a luxury brand, we do not think this has had a strong effect on the customer mindset in the brief time span since the announcement.
First, the results are astoundingly surprising! Heads-up, owners of premium cars (MB, BMW, Audi, JLR, Porsche) are more positive than general customers.
Among the premium customers, roughly 25% consider Chinese brands when purchasing a car. This is a significant threat to German/EU OEMs, given the fact that most Chinese brands have not yet started their marketing/communication activities. Surprisingly, the general German customer shows notably less willingness (16%) even though “value-for-money” is the key driver for respective purchase decisions (46% general vs. 57% premium). Overall, the EV market will be severely more clustered with the Chinese entrants. Here the existing market player will have to fight to sustain market shares, while the Chinese need to be aware that conversion to a purchase will require investment into the right channels.
As the market becomes fragmented, customer perception and openness to the latest brands are also changing. Almost 50% of the premium customers believe that Chinese OEMs will be successful in Europe, while the general customer is more conservative at only 35%.This high percentage illustrates a leap of faith by German customers toward Chinese OEMs that there is a certain level of trust or an expectation of technical leadership in developing EVs. In particular, the Western OEMs need to underline the strength of their upcoming EV portfolio and provide the WOW-effect of their product substance (clear product USPs). Their Asian competitors, on the other hand, will still have to prove that quality and service will not be causes to reject a purchase of Chinese models.
The struggle to get the attention of first-time car buyers is real. Premium German OEMs particularly know how crucial it is to convince the age group 30-39 or Gen Y to become their first-time customers. German OEMs will face a dramatic challenge as 42% (vs. 16% of general German customers) of this group are willing to acquire a Chinese product. This group is very clear on the reasons to conduct such a purchase (only 10% stated “I don’t know”), while 60% of the general customers at this age state the technical specifications of the Chinese brands. The European first-time buyer in most countries will be a decisive group to convince towards the new entrants or to keep with the existing brands. As such, in particular, marketers should consider focusing significantly more on addressing this respective group with a surgical approach.
A willingness to purchase a Chinese car, not knowing the brands and what they stand for, is obviously an obstacle for premium Chinese brands. Though brands such as Polestar, NIO, and BYD have the highest brand recognition among the Chinese OEMs entering the EU market, it is still a limiting factor not to have experienced the brands on hand. The recognition counts for both premium customers and the average customer. In fact, once customers have any touchpoint with Chinese brands, the purchase consideration jumps from 21% to up to 85%. Overall, this emphasizes the importance of brand and product awareness and the groundwork to be done by the Chinese. It also emphasizes the immense significance of deals such as the recent one between BYD and SIXT, providing a vast number of customers with the possibility of experiencing Chinese products firsthand.
A critical challenge for Chinese OEMs will be gathering valid data to define their target group and clearly understanding the German/European customer in detail. Valid market data can and will help Chinese OEMs to understand their value proposition from the point of view of potential German customers and reframe their messaging. Our data indicate a strong difference among age groups (lowest: 18-29 with 11% and 65+ with 16%) and propose the marketing of the cars among potential premium customers around the attributes of affordability and EV technical features (range and charging times).
The omnipresent discussion of the notion that politics are an influential factor in the purchase decision of the German/European customer seems to be a valid point. Whether it is political topics or purely the mistrust in Chinese technology, such as the Huawei/ZTE case, the media perspective is always a polarized picture of opposing Chinese products. However, our study indicates that German customers are less influenced by these political arguments than expected. In fact, 50% of the customers (general and premium) state that it merely has an effect on their purchase decision. Thus, when confronted by political provocation, OEMs are recommended to emphasize the separation between the mere attempt to offer customer-oriented mobility solutions to political turmoil while keeping their ground on the fundamental values of the brand proposition.
So, after this short excursion, what are the detailed results?
While most German customers cannot name any Chinese brands (more than 70% – see figure 1), this figure reduces strongly with premium customers (57% – see figure 2) and the ones experienced with CN OEMs to only 2% – see figure 3 (can name several brands). Polestar, Nio, and BYD are the best-known brands named by at least every fifth customer asked. Brands such as WEY (GWM) or Xpeng are barely known. From our point of view, this obviously has a lot to do with the heritage (Volvo-Polestar), strong marketing efforts, the presence of cars on the road, and also the stock market attention where many customers are hoping to invest in the next Tesla (Nio/BYD).
What is much more outstanding is the general openness toward purchasing a Chinese model. Only 17% of the general German customers showed strong or somewhat openness towards purchase willingness, while this figure increases to every 5th (22%) premium customer asked. Once a customer gains experience with Chinese OEMs, it appears that the Chinese are unstoppable within the purchase decision basket of the German customer (74% of the customers asked). This indicates that the key purchase barrier might still be the strong lack of brand/product awareness and brand/product experience. While the Chinese are champions at playing the game of customer-centricity on their home ground, this provides the impression of a fantastic opportunity for opening up to German customers.
Though asking premium customers about specific brands, the willingness decreases roughly 2/3, with Polestar being in the forefront (12%), followed by Nio (6%) and BYD (7%). This changes decisively with customers experienced with Chinese products, Polestar (83%), Nio (34%), and BYD (71%). From our point of view, this shows that legacy and history do make a difference when it comes to customer trust. Polestar is perceived as a Volvo company (and, as such, with European DNA), BYD has been around for more than 20 years in European discussions, while Nio is the new kid on the block and still to convince customers. Besides legacy and history, Polestar specifically has been marketing the brand heavily since 2018. The Swedish/Chinese brand has gained brand momentum throughout all media outlets with its high-street stores and social media presence. It seems that once German customers have taken comfort in a Chinese OEMs driver’s seat, they are willing to stay.
On the other hand, not-so-surprising key reasons for purchasing a Chinese car are mainly “value-for-money” (45% premium / 54% general) and key electric vehicle features such as range (19% premium / 41% general) and charging time (11% premium / 47% general). The most emotional purchase reason, “design,” is only stated by every 12th premium customer, while over a third of premium customers who have had experience with Chinese OEMs say that this would be a trigger. As such, more investment in sleek and distinctive European design is necessary for all new market entrants. In paradigm examples such as the Hyundai Ioniq 5, we can observe that such an adaption has a strong impact on direct acceptance by customers and sets the pace for a successful story of a model.
Asking the customer which Chinese attributes might be superior to German brands is not so astounding – the majority believe, analog to purchase reasons, in “value-for-money” (42% premium / 53% general) and “base equipment level” (19% premium / 48% general). What is shockingly low, though, is eRange, charging time, and design – all main decision factors for the latest brands. Here, Chinese OEMs need to prove their designs being able to convince buyers of any premium price. As such, the current price strategies of the Chinese OEMs (e.g., BYD, WEY, NIO) are on shaky ground if customers cannot observe clear competitiveness for these attributes.
Once all the factors are taken into consideration by premium customers, the page no longer looks so peachy for Chinese brands. Only 2% of premium customers state that it is highly likely that they will purchase a Chinese model, and 4% are somewhat likely to buy one. Considering the volume sold by the premium brands in Germany in 2022, this would mean a max potential volume of 25-40k units. Obviously, even most optimistically, it is a tiny market for the number of brands launching in this segment (Nio, Xpeng, HiPhi, RedFlag, Wey, etc.).
Again, this picture is significantly different with customers who have already gained experience with Chinese brands, with 14% highly likely to purchase a Chinese model and 21% somewhat likely. Though, still keeping in mind that these customers expect “value-for-money.”
Almost 50% of premium customers believe so (19% highly likely, 28% somewhat likely), while those customers who have experienced Chinese products are absolutely convinced (74% highly likely, 11% somewhat likely), cementing the risk for the existing market players.
Here, the answer is not so clear but rather a 50/50 statement from a premium customer’s POV. The figure looks different from those who have had experience with a Chinese OEM – here, 60% respond that it has an impact on their decision. This indicates that although these potential buyers have a great willingness to purchase Chinese OEMs, they have a critical view of the political landscape.
Going forward, there is obviously much more potential to dig deeper into this topic and understand more profoundly the challenges of the customer needs in Germany and beyond – especially as we think all business aspects should start with understanding customers and their respective needs. We conducted further detailed analysis on customers who experienced Chinese brands, revealing many more insights about where the future will lead to. In this case, we would like to conclude that though there is somehow a visible potential for Chinese premium OEMs with clear USP expectations, the future touchpoints with customers will be the decisive factor. One size does not fit all, resulting in Chinese OEMs creating unique brand propositions or providing best-in-class customer experience touchpoints, as Polestar highlights. WOW moments will be of key need, positioning the brands in an effective approach. A brand that demonstrated this momentum was Tesla – creating first a WOW and harvesting the crops – now the most sold electric car in Germany is the Model Y.
At Berylls, we have profound experience and understanding of the challenges of the automotive markets, focusing on customer-centric approaches and trying to understand the customer needs in all levers while contributing our knowledge to successfully market products and Go-To-Market strategies.
Civey, as one of our partners, provides us with the core tool to understand the consumer and their respective needs in a thorough but swift approach, allowing us to grasp the smallest changes in customer attitudes and needs.
As such, we can provide you with a short-term analysis of certain customer groups while translating the results into clear actions toward a successful strategy.
Also, our diverse and international team has a significant understanding of cultural and market challenges, enabling us to passionately help our clients in surgical tasks or larger strategy developments.
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pragmatic approach to identify and assess supplier risks
If the last few years have taught us anything, it is that automotive supply chain risk is real. Companies need a structured process of supplier risk identification and mitigation: This is the only way to embed end-to-end supply chain resilience for the future.
The automotive supply chain is extended, global, complex – and fragile. The list of recent and current supply chain shocks and disruptions is already long. The Covid-19 pandemic, logistics failures, political turmoil and warfare have stressed existing automotive supply arrangements to breaking point, while new technologies and new types of suppliers are concentrating risk and supply dependency. There is no reason to think this volatility and risk escalation will end any time soon. Companies need to mitigate supplier and supply chain risk, and to do so they must quantify it.
Where industrial supply chains are longstanding and the supplier base is rich and competitive, supplier risk may be limited. But where supply needs are developing rapidly against a background of global uncertainty and technology change then risk will inevitably rise. And that is exactly the situation the automotive industry faces today.
The shift to electric drivetrains, connected software-defined vehicles and mobility services have combined to create the greatest period of change the automotive industry has faced. Nowhere is this more visible than in the supply chain arrangements that are critical to automotive success. Change takes the form of increasing process and product complexity, rising demand for new resources and materials that in turn creates strong global inter-dependencies, and an irreversible growth in environmental awareness and demands.
The risks to resilience created by such changes are already apparent. Shortages of both raw materials and finished goods have already caused production stoppages and lengthening delivery times. These event-driven vulnerabilities have been exacerbated by extended global logistics chains, where a break in one link of the supply chain can disrupt the entire production process.
Meanwhile both OEMs and suppliers are struggling to meet the demands of increased product and process complexity. The skills needed to adapt to a digitized sustainability-first industrial model are in short supply, leading to a near-monopoly by some technology suppliers and increasing levels of dependency where risk can no longer be mitigated by multi-supplier strategies. As a result, analysis and mitigation of risk has never been so important.
Despite clear evidence that supply chain fragility is a rising risk factor, many companies have not taken action to address the threat to their competitive position. According to independent research, some 37% of automotive companies do not have formal supply chain risk monitoring procedures in place. This should be addressed as a matter of urgency.
The Berylls risk approach allows companies to create a holistic yet pragmatic assessment of total supply chain risk. The approach includes a component- and process-related risk assessment, together with an event-driven quantification of political and logistical risks, including the risk of natural disasters, or political crisis.
In a complex supply chain, identifying critical suppliers represents a heavy workload. For many companies, supplier or risk management functions simply do not have the resources to perform detailed or sophisticated analyses of the total supply chain. So instead of trying to ‘boil the ocean’ at a stroke, companies should adopt a targeted and pragmatic approach to risk identification and mitigation.
The approach starts with a six-step Q&A process. By answering this simple set of yes/no questions an initial set of critical suppliers is identified, which can then be analyzed in greater detail to generate supplier risk rankings and precise mitigation measures.
Step one: Filter for critical suppliers by component / process criteria. This filter determines criticality according to characteristics of components, the supplier market, and the supplier’s value creation process.
Step two: Filter for critical suppliers by event-driven factors. This step determines criticality according to the buyer-supplier relationship, political factors, the logistics chain, and potential catastrophic risks.
The result of the initial six-step review may be that many suppliers qualify as critical. Companies should then consider their own appetite for risk and raise the threshold for criticality accordingly, by assigning critical status only to those suppliers that generate multiple ‘yes’ answers in the initial review, or by assigning scores to selected answers.
The six-element process determines supplier criticality, but determining actual risk demands more detailed analysis. Therefore, a series of further indicators are used to determine the level of supply chain risk for specific suppliers, which can then be ranked according to the need for mitigation. These include product and supplier indicators such as component characteristics, raw material scarcity, number and maturity of suppliers in the market, and supplier performance including cybersecurity performance. They also include market indicators such as technology complexity, costs and competition. Event-driven indicators include regulatory change, political pressures and infrastructure dependence, logistics performance and cost structure, as well as vulnerability to extreme events.
Of course supply chain risk management does not stop with identifying and ranking critical suppliers: mitigation measures need to be derived, launched and tracked. In our experience, the key to mitigation is cross-functional awareness. Companies need to be aware of their supply dependencies not only within their markets, but also within the wider business environment. Risks are identified faster and better when this understanding runs right across the organization.
Supplier risks are best mitigated through collaboration within the supply chain. Whether risks are related to logistics, or political stability factors, or carbon emissions, an understanding of a supplier’s operations, transparency, and a shared effort to eliminate risk is vital. The role of the procurement function is critical here, as it is closest to individual suppliers and most likely to hold the levers that are capable of managing risk.
Yet whatever the path to mitigation, the beginning and end of better supply chain risk management is knowledge. As investment professionals often say, the biggest risk you face is probably the one you don’t know about. The Berylls approach to risk identification and scoring is designed to be a pragmatic, low-cost method of eliminating the risk of the unknown.
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ive success principles from concept to execution
The launch of new products, new plants and new production lines has always been a critical challenge for auto companies and their suppliers. For e-mobility production, where product and process complexity are greater, this challenge becomes even more acute. So, how can companies bake in success?
At Berylls we have hands-on e-mobility production experience all the way from concept to wheels on the road. As always, we think holistically and help manufacturers to do the same, developing infrastructure and deploying both teams and capital machinery with an end-to-end worldview.
But this is the real world and things can and will go wrong. We have learned that beginning with an understanding of the most common points of failure in an e-mobility manufacturing project means success becomes the likely outcome. Experience tells us that there are five common pitfalls in e-mobility manufacturing development that can be turned into success factors.
E-mobility production is characterized by high complexity. Compared to conventional automotive manufacturing, any one value stream will comprise more components and more process steps. This means the production blueprint needs to be defined in exhaustive detail. Machine specifications and capabilities are critical: quality demands are exceptionally high. And process resilience needs to be designed in, so the production chain can be de-coupled when needed without freezing the entire production process.
Technical cleanliness is a measure of particulate and other potential contaminants in the production process, usually as defined by the VDA 19 process standard. It sounds routine and that is why it can be underrated. But you cannot afford to underestimate it in e-mobility production. Manufacturers must understand customer demands and cleanliness standards and run them all the way back through the supply chain. Every team member must develop this quality awareness and testing technology must be fully enabled.
Pre-determined KPIs for machine performance do not self-actuate: they must be tracked continuously and rolling performance communicated with all stakeholders including suppliers and users. Teams must be KPI-aware and empowered to intervene immediately whenever necessary.
Operational readiness is not a fixed quality: it depends on rapid feedback from the shop floor and rapid response from decision-makers. That means active involvement from executive managers onsite, from day one. Daily alignment meetings based on feedback as close as possible to real-time are necessary.
In e-mobility customer requirements can evolve fast. Responding fast means a common understanding of technical feasibilities that allow all stakeholders to understand – but also challenge – requirements as needed. Involving the customer from the beginning and communicating transparently is key here.
A successful and safe cell launch consists of several elements – Technical Cleanliness is just one ingredient.
Cell suppliers need to “juggle all balls” at the same time while facing ambitious capacity expansions.
The advantage of end-to-end is clear: get it right at the beginning and you are set to get it right all the way through.
This means following a holistic framework from the conceptual basics, to identifying the best possible plant location and defining the production blueprint, and on to building the required capabilities for a successful launch. Whether you are a newcomer to the automotive industry (and in e-mobility there are many) or an established automaker, the end-to-end mindset is key to successful collaboration with stakeholders through every stage of product and process development.
It may seem obvious to say it, but the foundation for successful execution is a strong project management office tasked with coordination: that means coordinating risk analysis and mitigation, time planning, and KPI and measure tracking across all workstreams.
This is end-to-end in practice. From shop floor to the boardroom and back again.
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p to 160 BEV launches per year are expected globally soon. But as our project experiences and latest press releases show, automotive OEMs and suppliers struggle to launch and scale up electric vehicle production already today.
Read below how industry players can meet the increasingly complex development and production to master future e-mobility launches, which requires to handle a dynamically changing environment combining the two worlds of hardware and software.
Are you up for the challenges ahead?
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n unstable times, choosing the right supplier gives certainty and cuts costs.
Fact-based approach to supplier selection helps OEMs avoid delays and cost overruns as they ramp up ev production and work with less experienced suppliers.
The current state of flux all along the automotive value chain makes assessing and choosing the right suppliers extremely difficult. Taking a fact-based approach helps OEMs avoid delays and cost overruns.
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hy the new market entrants can only gain sales traction in a well-functioning ecosystem with the right partners
This is the third and final article in our short series that focuses on the performance of Chinese OEMs (old and new) in Europe. Following the previous article, we take a hard look at the ecosystem around market entrants from China and what needs to be put in place for a successful rollout.
In our previous article, we listed the difficulties for Chinese OEMs to enter the Western European market. We also pointed out market entry strategy directions in terms of short-term, mid-term, and long-term planning.
Within this article, we would like to talk about how to take the first steps into the mature European market. How to conduct the entry comprehensively and agile plus the various key aspects that need to be in place to ensure success in setting up the business and sales model.
The European market is a tough environment, extremely clustered and, it is dominated by local brands that have already gained customers’ trust and loyalty. Competitive new entrants, like Tesla, and Lucid are further big threats. As such, Chinese OEMs must find the appropriate spot – the right business model to enter this market. At the core this means playing to their full strength which is “customer-centricity”. However, without setting up the ecosystem around their customers, this strength will not help gaining sales traction. And as we mentioned in our last article, not even maturing and compelling products will sell on their own. For instance, how do customers get to test drive a Chinese car without a partner that provides facilities and personnel to organize them? But let us discuss this step by step. In fact, let’s jump into the driver seat and live the path of the European customer on how to purchase/own a car?
First of all, customers in Europe, in general, are different from those in China but moreover the respective grouping of customers. The number of corporate customers (B2B) is significantly higher than that of individual customers (B2C), and the proportion of corporate can reach up to 70%. For these users, leasing instead of purchasing (with or without credit) is the preferred choice.
Individual customers have more options. They can purchase a car directly from the dealer with full payment; they can use credit to buy a car; they can lease a car; they can use subscription mode for their mobility needs, etc. Unlike Chinese customers’ purchasing behavior, direct purchase has a lesser significance for them.
To satisfy the different demands of European customers, there are various sales model setups that can be observed in Europe:
From a market entrant perspective, the traditional wholesale with dealers is the easiest way to set up the business model as it can be quickly deployed. But there are still some historical challenges to face with this traditional approach, such as:
As a result, most new players (especially the tech-industry-rooted ones) choose to enter the new markets with agent models.
Thus, pure own retail seems to be the ideal model for new players to obtain maximum control. However, it requires a large amount of capital investment, a long lead time and it cannot be applied to all Chinese OEMs.
To define the right business and sales model, OEMs need to evaluate all influencing factors carefully and comprehensively, including internal targets but most importantly external factors which cover, for instance market structure, competitors and not to forget customer segments (at the very least B2B vs. B2C).
Based on the challenges of the different business and sales models alone, it’s obvious that a market entry cannot be done successfully without partnerships.
From our perspective, to cover the high variety of customers, there are at least four partner types a Chinese OEM needs to consider:
As we described in our previous articles, understanding the European Markets is the key to unlocking the success story of the respective market entrants. For that the right Market Intelligence partners are required. It is of utmost importance to acquire critical knowledge in the decisive market factors, such as:
Based on this holistic understanding only, the right strategy and guard rails can be set for success.
While the Distribution partner topic seems to be obvious, it’s important for Chinese OEMs to find reliable and large dealers who are willing to invest (e.g., retail marketing). Considering the ongoing shift towards agent models by Western OEMs, dealers are squeezing their respective profit margins of their current business. Hence, we believe that most retailers are eager to cooperate with Chinese players.
As a matter of fact, we strongly recommend Chinese OEMs to set up a dealer partnership. This should be the first step when entering such a complex market as the European one. It enables physical showroom construction which provide the space for the decisive product experience and most significantly, customer experience services like test drives and consultation.
Besides traditional dealerships, Chinese OEMs ought to consider opening experience points, such as Brand Experience Centers, Flagship stores, or Pop-up stores, just to create market presence and touchpoints with customers.
Physical presence with respective customer experience (within the entire Customer Journey) is the door opener to the European markets. And an experienced dealer partner can significantly accelerate the penetration in terms of physical presence.
Financial Services partners are also of utmost importance due to the described B2B/B2C market segments. Customers are attracted by products presented online and in physical outlets, the conversion to a real sale requires offering the right financial solution. Customers, for instance in the Southern European markets, mostly will only acquire their new car if the right financing product is offered. Without these financial services, B2B sales and a substantial portion of the B2C business won’t be possible. European customers will expect the same availability of various financial options compared to the offering of Western OEMs’ (i.e., flexible leasing, combinations of leasing and financing, etc.)
In addition, we recommend New Sales Model partners such as subscription expert companies aligning to the new market trend of short-term ownership. Committing to a product from an unknown brand for ten thousand of Euros is certainly not an easy decision, but a short-term subscription (let’s say: 1-3 months) with adequate monthly fees can provide the first step into experiencing these new products on the market.
As these issues all rely on partners, Chinese entrants need to start their partnering exceedingly early on. They need to find committed partners with a strategic fit to the core values of their respective brands to be successful.
Key questions may arise for acquiring the most suitable partners:
These are real-life problems confronted by Chinese OEMs currently. Furthermore, there are crucial aspects that can empower a swift partnership or hinder it. Some Asian entrants, for instance, required many years to set up their first strategic partnerships without a clear path on what to be achieved in the coming years. One of these core challenges is the difference in cultural understanding of “how to do business” and what “partnership” means.
While the European approach is rather streamlined and all aspects of negotiations are based on a clear vision, strategy, and milestones, the Chinese way is based more on an iterative process with nothing being carved in stone – sometimes meaning that even contracts sought to be renegotiated. This leads to obvious frustration on both sides.
In order to proactively prevent such frustration, the following aspects are required to successfully launch a partnership:
At Berylls, we have deep international experience in solution findings about the “Go-to-Market” topic and we think ecosystem/partnership management is one of the most crucial success factors. We are interlinked with widespread relationships with many automotive participants in Europe. As such, we can provide you a name list of partners altogether with detailed Berylls inputs. We join our clients in the selection process of the most suitable potential partners and accompany the whole negotiation process.
Besides, our dedicated “Berylls partnership management guidebook” will address most of the key questions concerned by partners and give clear guidance for all references. Also, our diverse and international team has a significant understanding of cultural and communication challenges, as we are passionate and compassionate to help our clients in their success.
With this part, we conclude our short series on Chinese OEMs’ performance in Europe. Missed the other parts? Find the complete series here and stay tuned for further insights from the China team.
Pressemitteilung
Featured Insights
er WCAR genannte ETF ist der erste Index, der ausschließlich Unternehmen der globalen Wertschöpfungskette innerhalb der Mobilitäts- und Automobilindustrie zusammenfasst.
München, Frankfurt, 27.September 2022: Berylls, LeanVal Research und WisdomTree, der Sponsor börsengehandelter Fonds (ETF) und börsengehandelter Produkte (ETP), geben die Einführung des WisdomTree Global Automotive Innovators NTR UCITS ETF (WCAR) Index be-kannt.
Der WCAR ist der erste Index, der das gesamte globale Ökosystem der Automobilindustrie abdeckt und die zukunftsorientierten Strategien der Unternehmen berücksichtigt, indem er die 100 relevantesten und vielversprechendsten börsennotierten Unternehmen weltweit um-fasst. Der Index ist damit sortenrein und umfasst die folgenden Sektoren innerhalb der Auto-mobilindustrie: OEMs, Zulieferer, Autohändler, Mobilitätsdienstleister und Infrastrukturanbie-ter. Dadurch kann der ETF auch alle Megatrends erfassen, die den Wandel der globalen Auto-mobilindustrie prägen. Diese sind Konnektivität, autonomes Fahren, geteilte Mobilität und Elektrifizierung.
Bei der Entwicklung des WCAR ist WisdomTree eine Partnerschaft mit Berylls und LeanVal Research (LeanVal) eingegangen. Berylls, im Jahr 2011 gegründet und bis heute auf nahezu 200 Mitarbeiter gewachsen, hat einen klaren Fokus auf die Trends, die die Zukunft der Mobilitätsbranche prägen. Damit besitzt Berylls einen einzigartigen und vollumfassenden Überblick über das Universum der Unternehmen, die von den Megatrends der Mobilität profitieren werden. Die Auswahl, der für den WCAR selektierten Unternehmen basiert dabei auf einer automatisierten Analyse von mehr als 20 unabhängigen, quantitativen, proprietär durch Berylls entwickelten Kennzahlen, die die Strategie, Wertschöpfung, und Wahrnehmung der einzelnen Unternehmen erfassen und vergleichbar machen. Bei der Unternehmensauswahl für den WCAR arbeitet Berylls eng mit LeanVal zusammen. Das Equity-Research-Unternehmen, gegründet im Jahr 2017, verfügt über eine umfängliche Expertise in der Analyse, Bewertung und Auswahl von Aktien sowie in der Entwicklung von Aktienstrategien auf Basis hochwertiger Daten.
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