Business / Companies

Sales, service, localization-the mantra for success of Shaanxi Automobile

By Du Juan (China Daily) Updated: 2016-07-04 07:48

Sales, service, localization-the mantra for success of Shaanxi Automobile

An employee works on a heavy-duty truck production line of the Shaanxi Automobile Holding Group Co Ltd in Xi'an, Shaanxi province. [Wei Yongxian/For China Daily]

Shaanxi Automobile Holding Group is eyeing one-third of its vehicle sales from overseas markets

Shaanxi Automobile Holding Group Co Ltd, the only heavy truck producer in western China, has been expanding its overseas business on the back of its growing market share in the domestic market.

As the country's Belt and Road Initiative brings increasing opportunities overseas, the company, which is also called Shaanqi Holding, will strengthen its sales and service networks and implement a localization strategy to increase its market.

The company sold 8,000 automobiles, or around 10 percent of its total sales, in overseas markets in 2015.

"Our target is to raise the share of our overseas market sales to one-third of the company's overall sales by the end of 2020. Meanwhile, one-third of the overseas sales should be locally produced by then," said Wang Yanhong, general manager of Shaanqi Holding.

He said the quality of China-made heavy trucks has improved a lot in the past decade and many export models are welcomed by foreign clients in Southeast Asia and Africa.

"Many of our products have better performance than their peer group vehicles," he said.

The company has so far exported its trucks to more than 90 countries and regions. It owns three subsidiaries, 37 offices, 24 "4S" stores, 70 initial dealers and 310 service stations in overseas markets.

In some countries like Ethiopia, Iran, South Africa, Malaysia and Nigeria, the company has its own assembly units, which has greatly increased its localization level.

Tian Chao, general manager of Shaanxi Heavy Duty Automobile Import & Export Co Ltd, a subsidiary of Shaanqi Holding, said the performance in the last year was not satisfying in his view.

"Our exports were affected by the price drop in crude oil last year. Russia, the big energy giant that used to be our best foreign market, reduced its orders due to falling oil prices," he said.

The devaluation of the rouble has worsened the export scene.

However, Tian said the crude price will not always stay low and the company has been actively exploring new foreign markets.

"Vietnam, the Philippines, Pakistan and Africa are all potential markets for us," he said. "The company will increase efforts on branding. It's very important. We entered the overseas markets 10 years ago, which was not as early as our European competitors. Thus, some foreign buyers still prefer to choose the second-hand European products than Chinese ones. The major reason is that we don't have strong brand recognition." He said the company will improve its after-sales service by increasing the number of service agents abroad.

Another focus area would be electric vehicles or EVs.

Sales, service, localization-the mantra for success of Shaanxi Automobile

Workers check heavy-duty trucks in a factory of Shaanxi Automobile Holding Group Co Ltd in Xi'an, Shaanxi province. [Photo provided to China Daily]

Boosted by the Chinese government's supportive policies for the new energy vehicle or NEV sector and measures to reduce carbon emissions, the EV industry has achieved rapid growth in the past two years.

According to the China Association of Automobile Manufacturers, China produced 70,552 EVs in the first four months, up 165.3 percent year-on-year. It sold 66,444 EVs during the same period, up 171.2 percent year-on-year.

The company started EV research and development in 1999 when it designed and produced the first electric tractor which was used in Shanghai port.

Wang, general manager of Shaanqi, said the company will invest 50 to 100 million yuan in research and development on electric automobiles this year and increase the investment accordingly in future.

The company produced and sold 900 EVs in 2015. Wang expects the company will produce and sell 2,000 EVs this year.

"The battery technology is the core for electronic automobiles. The gap between China and Europe is narrowing," Wang said.

After rapid growth in previous years, China's heavy truck manufacturing industry is riddled with overcapacity now: production capacity is more than 2 million units a year while demand is less than one quarter of it.

In 2015, China sold 540,000 heavy trucks. Wang expects sales will grow to around 600,000 units this year.

So, the company is looking at niche markets. It has decided to develop new models and offer better service, particularly for the booming logistics industry.

In the January-May period, the company's sales of heavy trucks to the logistics companies rose by 50 percent year-on-year.

The company plans to produce and sell 100,000 automobiles this year, which, if achieved, would ensure 30 percent year-on-year growth.

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