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Chinese OEMs explore alternative sales channels

Domestic and foreign car manufacturers in China are under pressure: not only 2019’s economy slowdown caused the market size to shrink by 8.2%, but especially the coronavirus disrupted manufacturing and sales of new vehicles.

Another factor comes into play today. As Chinese OEMs are figuring out how to climb out of today’s disastrous situation, the Chinese consumer is moving away from the car as a status symbol. Ride-hailing and other sharing models have become so popular that they’ve become a direct competitor to consumer sales.

Leasing model

In order to boost sales, the Chinese carmaker BAIC and ride-hailer DIDI are joining forces with an interesting group of co-investors (CATL, batteries, State Grid, Postal Savings Bank of China and used-car trading platform Uxin) to build a leasing company.

The leasing platform, that aims for 100.000 cars in 3 years, will serve as a tool to provide cars to Didi, but also to develop car sharing solutions.

Ride-Hailing as a client

BAIC is not the only Chinese OEM looking at ride-hailers to fill the gap of missed consumer sales. VW and BYD already have joint ventures in place with Didi, whilst SAIC and Great Wall have decided to compete with the Chinese number one and start their own hailing operations.

Authored by: Yves Helven