How Far Has China's Auto Market Gotten Competitive

All Autobots breathed a sigh of relief.

Last week, the Central Economic Work Conference was held in Beijing, where the economic work for the coming year was outlined. Notably, when discussing "adhering to the leading role of domestic demand and building a strong domestic market," it emphasized the need to optimize the implementation of the "two new" policies.

The so-called "Two New" policy refers to the large-scale equipment upgrade and the exchange of old consumer goods for new ones.

Among them, the consumer goods related to the interests of the common people have always attracted attention with the trade-in policy, affectionately referred to as "national subsidy." The official directive has clearly conveyed a message: the overall direction of vigorous promotion next year will not change.

Based on this background, with the arrival of favorable news, the opening sentence of the article undoubtedly reflects the shared sentiment of all Chinese automotive industry professionals. Everyone clearly understands that if the Chinese car market is to maintain steady growth next year, it will definitely rely on the support of this "crutch."

As an argument, let's take the example of the first week of December that just ended. Due to the sudden early phase-out of the "national subsidy" this year, the nationwide retail sales of passenger cars quickly experienced a 32% year-on-year decline, and the anxiety quickly spread across the market. In a previous interview, William Li, the founder, chairman, and CEO of NIO, issued a similar warning: "The tail-end effect of the fourth quarter is gone."

Fortunately, we feel relieved that the continuation of the "national subsidy" is like giving everyone a "reassurance."

Of course, from my personal perspective, the timely introduction of policies has simply provided the automakers, who are starting from a new starting line, with a "source of motivation" to move forward. Ultimately, who can successfully finish the race and who will fall behind in this grueling marathon will depend on their determination, endurance, and tactics.

Recently, I've heard a saying that "the Chinese car market has reached its limit of competition." In response, some argue, "The Chinese car market is just getting started."

The battle next year will become even more brutal.

01No dimension should have a shortcoming.

"I am someone who habitually looks for problems from internal causes because external factors are beyond anyone's control and constantly changing. Always attributing sales volume, success or failure to external causes is of little value. The reduction of national subsidies does have a real impact on the market. However, for our brand, if your organizational ability and competitiveness are indeed stronger than others, you should be selling more. I am still willing to use the opportunity of this stimulus to examine whether there are aspects of our product, management, and operations that can be improved internally."

Last week, in Caohejing, Shanghai, I met Shen Fei, who has been the president of Ledao for 8 months. When asked about the month-on-month decline in delivery volume in November, he gave the above response.

At that time, in addition to feeling the clarity and pragmatism of being the helmsman, what I experienced more was the intensity of competition at the terminal level. Even a pure electric SUV like the L90, which was considered a "phenomenon-level six-seater" at its launch, maintained steady sales of over ten thousand units for only three months before ending its initial sales period and transitioning from selling production slots to selling actual inventory.

At this moment, looking back at Shen Fei's output, I have read another layer of meaning: "In order to establish a firm foothold in the current Chinese car market, there must be no shortcomings in any dimension."

It is foreseeable that next year, each segment will inevitably see an influx of new players, which means that every existing blue ocean will become blood red.

Therefore, it is required that everyone must diligently cultivate their internal skills. Consequently, the focus should further center on the fact that any car company aiming to stand out next year should possess the following qualities.

First, the company must have one or two flagship products that can support its volume. The era of "having more children makes fighting easier" is over; now, the focus is increasingly on single-point breakthroughs and decisive victories.

To put it more plainly, it is crucial to identify fleeting niche opportunities in a fierce and competitive market and precisely seize them to convert into orders.

Secondly, the intelligent experience must keep pace. In fact, this year, in terms of the development of this dimension, there is indeed a sense of stagnation due to various "black swan" events.

However, next year, as the leaders deepen their efforts, I believe the gloom will surely be dispelled. Taking intelligent driving as an example, if you cannot keep up with the mainstream progress during this "technological explosion," you will inevitably be rejected or even eliminated by consumers who increasingly value the richness of functions.

Furthermore, pricing must be done in one go. This year, although voices against "price wars" are incessant, everyone deeply understands that the essence of the transition to electrification is to completely overthrow the traditional pricing system of fuel vehicles. The rules are being reshaped, the landscape is still unclear, and the firepower simply cannot stop.

Next year, the competition will undoubtedly be more intense, especially as the overall experience of products at various levels becomes increasingly homogenized. Pricing will become the "sword" that can most effectively resonate with consumers. Therefore, to achieve significant sales, there must be no room for compromise; direct competition is essential while ensuring reasonable profits.

Finally, one must learn to discover the right people. Let me ask, why was Le Dao able to rebound this year? Boldly employing Shen Fei certainly played a significant role.

"I have always firmly believed in a principle: 'If the emergence of a new force relies on timing, location, and human factors, then the latter accounts for as much as 90%.'"

In other words, having a good captain is the key for a big ship to keep moving forward.

Similarly, the same principle applies to every original equipment manufacturer (OEM). Next year, to taste the flavor of victory, the product, intelligence, and pricing must be flawless, with the more fundamental support being "harmony among people."

It is no exaggeration to say that many automotive teams today resemble a "makeshift troupe." Amidst the mixed bag of talent, those who can recognize and make good use of people will reap the rewards. Of course, everyone should first reflect on themselves when problems arise, rather than constantly complaining about the unfairness and deterioration of the environment.

02The next competition is about systematization ability.

"In the current Chinese automotive market, it has become very difficult to defeat competitors with a single move, as many core technologies are only ahead by a year at most. For example, our fully active suspension system is only one and a half years ahead. If we return to the basic principles of this industry, it is a long-term marathon. If you can be just one or two points more efficient than others in every aspect, ultimately, you can be three to five points ahead of the competition. This is the difference between an excellent company and an ordinary one. In the end, it still requires building a solid fortress, engaging in a protracted battle, and making continuous efforts over time."

At the beginning of this passage, a viewpoint from a recent interview is presented again. The protagonist who expressed this viewpoint is still Li Bin. It cannot be denied that this year, after undergoing multiple rounds of profound realizations and drastic measures, NIO has gradually emerged from its predicament, thanks to the contributions of the Le Dao L90 and the new ES8, even glimpsing the dawn of profitability in the fourth quarter.

From these several hundred words, one can clearly perceive the change in Li Bin's mindset: "Next year's Chinese car market will not see a blitzkrieg, but rather a war of attrition, where the competition will be based on systematic capabilities."

Understanding systematic capability can actually be very simple. On one hand, it requires the various departments of a car company to know exactly what the right things to do are and to be able to persistently carry them out.

For example, on the vehicle planning front, please do not continue to create those resource-wasting, self-indulgent "cannon fodder" models. Instead, open your eyes, lower your stance, and genuinely launch cars that users recognize and appreciate.

For example, on the brand marketing side, please don't persist in the idea that "negative attention is still attention," blindly chasing various types of traffic without learning from backlash. Instead, take a moment to calmly consider what positive methods should be used to enhance the company's voice.

For example, on the technology research and development side, please do not remain in an information cocoon, treating features with low consumer perception as highly desirable. On the contrary, always consider "easy to use and lovable" as a premise, and focus on gathering and refining these aspects.

For example, on the sales channel side, please do not just put on a facade while secretly misleading and harming your own car owners; instead, genuinely care for every relationship and provide them with the service they deserve...

Another aspect of systematic capability requires that various departments of the car company truly put aside grudges and barriers, and collaborate as much as possible, working together to resist risks.

Marketing is the core of a company's business activities; it is the most important and challenging aspect of all company processes. It determines whether a company's products can be sold and is crucial for the labor results of producers to generate value. If a company cannot excel in marketing, all other efforts will be in vain.

"Not good at marketing, only skilled in technology; burying the meat in the rice only shows marketing incompetence and doesn't prove the product is good or that consumers don't recognize its value. Huawei and Xiaomi both have very strong marketing capabilities. Huawei's IPD and IPMS processes integrate marketing into the product development stage early on, considering how to market the product before and after its launch during the development phase. Some product features are specifically designed for marketing purposes."

Most people's reflections after reading tend to focus on the idea that selling cars requires marketing skills. However, I believe it more vividly illustrates the importance of having systematic capabilities. Whether it's Huawei or Xiaomi, both companies integrated marketing, research and development, and product design from the very beginning, ultimately achieving a "1+1+1>3" effect when the model was launched.

However, many brands that remain at the card table are still following the traditional model where the production and research department and the marketing department completely do not communicate. The former is only responsible for blindly manufacturing cars and then dumps them all on the latter for sale. If the performance does not meet expectations, they blame each other without any reflection or accountability. Ultimately, after one round of vicious cycles after another, the gap with the leading tier continues to widen.

As for next year, those automakers that still cannot master systematic capabilities are likely to quickly fall into a quagmire. It is important to note that, according to various current signs, the era of rapid growth for the overall market has come to an end, and what follows is a semi-stock competition era.

In such a turbulent environment, how can the internal competition end? As the saying goes, "The Chinese car market is just getting started."