Keeping China’s 4S dealers close has proved a winning formula for Geely
For 28 years, the Chinese auto market has grown year after year, but now the winds of fortune appears to be slowing. In such a climate the relationship between car dealerships and the manufacturer are even more important, and for Geely they are like family. Many of the dealership owners have close links with the company. Take the dealership that covers Shanghai and Wuxi, a city in Jiangsu Province, for example. The owners Mr. Zhang and Mr. Wu became friends working on the production line for Geely motorbikes before deciding to open a dealership together in Shanghai.
Mr Wu remembers that Geely chairman Li Shifu even came to the opening of the group’s first store in Shanghai back in 2010. Now Wu and Zhang have two Geely Auto dealerships in Shanghai with another set to open this year, together with a Lynk & Co dealer and another two Geely Auto stores and a Lynk & Co store in Wuxi. “Before Geely was not so much in Tier 1 cities but now about half of sales are in Tier 1 and 2 cities” says Wu referring to the Chinese way of categorising city size and development levels.
Most Chinese dealers are known as 4S shops. Up until the mid nineties functions were very fragmented with sales and repairs of cars split – although often they might be located within a few blocks of each other. Luxury foreign auto brands introduced to China the German type system of integration with the 4Ss standing for sales, service, spare parts, and surveys (customer feedback). Geely was one of the first Chinese OEMs to introduce the system.
Located near Shanghai’s Hongqiao Hub, which combines an airport and high-speed railway station, the dealership has had a win win relationship with Geely, growing in tandem as the fortunes of the company improved. At the beginning the showroom was split into the three brands that Geely used to operate in 2010. Back then Geely cars were not big sellers in cities such as Shanghai but things began to change from 2015 with first the introduction of the new Emgrand and then the arrival of Geely 3.0 models. “From the 3.0 era on everybody who drove the car, liked it. The product levelled up, the brand levelled up, the dealers levelled up, now other brands are looking at Geely to learn” says Wu.
Geely 3.0 wasn’t just about world class cars; it was about a better brand and a better customer experience. This has come from the top down with Geely headquarters taking a more prescribed role in how dealers are run. Standards lay out how the dealer operates down to the grade of tea served and come with a checklist. Management visits and mystery shoppers ensure adherence to standards. This may seem onerous, but the results speak for themselves. The Hongqiao store at the beginning averaged sales of around 2,000 cars per year but from 2015 this suddenly shot up to 6,000 and has kept growing. “When Geely pushes these standards it’s not just to help Geely but also the dealers” explains Wu.
For Geely HQ one of the most important Ss of the 4S dealer equation is ‘survey.’ Dealers provide the bridge between customers and the company giving feedback and suggestions on the cars, also alerting the company to any issues. Most information comes through this route.
But it is reciprocal; today the majority of customers come from online with Geely directing them through a live chat to the dealer. The customer is then invited to the dealership where they talk about what they want. Remaining customers are either walk-ins or else old customers looking for a new car or recommending Geely to a friend.
Wu feels that increasingly today it is about after-sales and what additional things you can do to enhance the customer experience citing that the number one goal is customer satisfaction. He employs test drive specialists who are experts in the car models and how to get the best out of their functions. Customers receive birthday cards. There are also events such as road trips for various models – dealers can apply to Geely HQ for funding for some such events.
In 2018, Geely Auto Group sold over 1.5 million vehicles, a 20% year on year increase, but many other automakers were not as fortunate and experience significant declines. Despite the uncertain market climate, Mr. Wu is confident for 2019. He has a new dealership set to open in Shanghai’s Songjiang District and feels that with Geely launching four new models including PHEVs sales should be strong. Thanks to government subsidies and incentives, PHEVs are popular in the Shanghai market and he managed to sell a hundred of the newly launched Bo Rui GE PHEV in one month. “Smaller brands may be heading into choppy waters in the future. The first casualties are always the dealerships but this will have a knock-on effect with the companies” says Wu confident of his decision to be part of the Geely family. He knows that with the new product launches this year he will be receiving training and won’t just be hung out to dry by the company.