The development of China's automobile market has entered the new era of four modernizations

According to the China Association of Automobile Manufacturers (CAAM), retail sales of passenger cars in China experienced their first decline in 20 years in 2018, with a decrease of 4%. The sales decline accelerated in the second half of 2018, and continued to decline at a double-digit rate in the first half of this year. This marks the end of the 20-year growth era in China's automotive industry, but also represents a new stage of development for the Chinese automotive market, mainly manifested in the following four aspects.

-Retail: From insufficient supply to oversupply, dealer inventory has grown to historically high levels;

-Car buyers: shifting from primarily first-time buyers to more experienced buyers;

-Moving online: Although over 95% of new cars are still sold through car dealerships, consumers spend more time researching and evaluating online before buying a car;

-Used cars: Since 2015, sales have continued to accelerate, with a 13% increase in 2018, accounting for nearly 50% of new car sales.

The above changes mean the arrival of a milestone era for Chinese automobile manufacturers (OEMs), with the focus of brand operation shifting towards retail. Many car companies have gradually moved towards the common practice of mature markets, determining production based on sales, and transforming their business ideas and incentive mechanisms towards retail. However, mature practices in overseas markets may not necessarily be effective in China. Chinese consumers have a more open attitude towards digital channels, and the legal restrictions on distributor exclusive rights are relatively relaxed, making the Chinese market landscape unique.

At the same time, the global automotive industry is being disrupted by new industry trends. The new four modernizations, also known as ACES by the US Center for Automotive Research, namely autonomous driving, connected driving, electric driving, and shared driving, directly affect the way Chinese car companies and dealers deal with customers. For example, with the rapid rise of transportation products and services, car companies have to consider how to find a balance between selling cars and meeting the demand for shared vehicles. In the field of after-sales service, interconnectivity has given rise to new business models that will affect the profitability of dealers. As consumers' expectations for car companies and dealers continue to rise, industry participants need to take immediate action.

We believe that car companies should promote marketing changes and implement overall transformation in seven areas: four belong to functional categories, namely sales management and incentives, retail network layout, marketing and brand building

Key implementation measures include after-sales service and customer value management, as well as organizational structure and capabilities, technology platforms, and ecological partnerships. We believe that car companies must develop a comprehensive transformation plan for the seven parts mentioned above, rather than attacking them one by one, in order to win.