QIUGUOTAO: RESHAPING FINANCIAL PRODUCTS AND SERVICE FOR THE HEALTHY DEVELOPMENT OF THE AUTOMOTIVE INDUSTRY
In recent years, with the upgrading of Chinese consumption and changing attitude toward car purchasing among the young generation, the car rental or leasing is becoming more and more popular. This also provides a living space for a large number of financial leasing companies. The explosion of the market brings the competition as well. In the point view of Mr. Guotao Qiu, Chairman of Guocheng Baoli Leasing (Tianjin) Co.,Ltd. , China financial leasing market is not just a Red Sea, and it has become a battle field with full blood. Because there are too many new players, all of them are trying to differentiate themselves to have a foothold in the competition.
Accurate sales provider and direction
The first sales provider (SP) is 4S dealerships. For them, the inflexible risk control standards from captive financial services can′t cope with different customer needs. Most captive banks are only limited to their own brands. “When 4S dealers achieve the sales target in the hope of obtaining more profits, the financial credit funds of captive banks are obviously insufficient. Moreover, the 4S dealers are under the great financial pressure due to the long-term capital occupation of the test-driving cars.” said Mr. Qiu.
Second sales provider (SP) is the secondary dealers, who are a different group of car distributors. Most of them are 2S stores, meaning only with sales and service. However, these 2S stores are carrying more than 60% of the total new car sales. They are mostly in the 2nd, 3rd or even 4th tier cities. They can not get the financial support from OEMs because their sales and capital can not meet the requirement of captive banks. But they have a similar financial pain pint as the 4S stores, therefore it is a potential new car retial market. Guocheng Baoli will provide financial leasing products to support the two types of SPs to solve their financing problem and become a “ United Automotive Financial Service Company” to the dealers.
Financial leasing can be done like this
Mr. Qiu told SG-Auto “Auto Business & Service” that Guocheng Baoli is involved in a bank fund that uses big data tool to obtain accurate purchase customers and pre-approve them. After approval, the requests of these customers will be directed to Guocheng Baoli. If these customers as an individual customer go to 4S stores to buy a car, they will not be able to get the best deal. But if they purchase through financial leasing companies, the leasing companies can get the best new cars and deliver the car to customers through the cooperative dealers. In this way, the trading scenario is made and the customer′s demand is met, so the customers can get better service and achieve a win-win for all the involved parties.
In Mr. Qiu's view, all the financial leasing methods, like hired purchase, direct leasing, lease leaseback and leveraged lease, all need lots of skills to design leasing products and each product has a different risk control standard and customer type. There are two types of financial leasing companies in China according to the nature of license and these two types of companies can complement each other in the business chain. Banks or the financial leasing companies with the license from China Banking Regulatory Commission have sufficient capital and customer resources. The financial leasing companies with the license from Ministry of Commerce, can make the collective purchase and provide localized service. In this way, the two types of financial leasing companies can complement each other with their advantage.
The essence of finance is service
In Mr. Qiu's view, the business model must first pass the market test then talking about the size. Only in this way can the business loop be closed. The pre-condition for business model to pass the market test is the financial leasing companies with license from Ministry of Commerce should have enough cooperative dealers and sufficient capacity to localize. Before starting-up Guocheng Baoli, Mr. Qiu has worked in many financial leasing companies, like Shouqi Leasing and China Grand-Auto Leasing. He has pioneered the financial leasing business models with China Grand-Auto leasing, set up Hengchang Haoche O2O financing models and founded Haoche Honghong, a one-stop financial service platform of auto business chain. With so many years finance work experience, he has gathered a large number of dealer resources. Now the number of cooperative dealers of Guocheng Baoli has reached over 510 and 75% are secondary dealers. In Mr. Qiu′s word, the essence of finance should be service, that is also why Guocheng Baoli must choose the right dealers as its partner. In 2018, Guocheng Baoli has got a 20 billion RMB credit from the bank. Based on this, Guocheng Baoli is going to set up an active and healthy auto service ecological chain.
In the future, Mr. Qiu wants to realize regionalized development because different regional market has different situation and customer needs, so it needs to have different market strategy. Furthermore, if the vehicle license plats are local, the risk is relatively smaller. Guocheng Baoli will adopt the strategy of having branch offices to joint develop with the dealer partners. At present, Guocheng Baoli has 14 branch offices, which are mainly located in the eastern region. In 2018, it targets to have 100 branch offices and cover most of the regions in China. The target number of the cooperative dealer partners is 2000. The branch office will not have its own showroom but cooperate with the local partners, therefore there will be no heavy assets. Each branch office will cooperate with 20-30 local partners and branch offices are consistent with the national standards of Guocheng Baoli.
Unlike some financial leasing companies to develop the “experience stores” with their own brand. Guocheng Baoli encourages cooperative dealers to use their own brands. Regional dealers are familiar with the local market and know what financial products suit the needs of local customers. Mr. Qiu thinks that the advantage of Guocheng Baoli lies in the fact that it can not only provide floating capital loans and treasury funds to cooperative dealers, but also jointly design financial products to carry out customized services together. Funds are then provided to help the partners with asset management, including customer overdue management and aftermarket service management. So we can say that Guocheng Baoli is a wholesaler of funds, but this is different from the funds wholesale from financial companies with license from China Banking Regulatory Commission.
Mr. Qiu thinks that there is a very obvious trend in the future, which is that financial leasing companies with China Banking Regulatory Commission takes their advantage with flexible financial products to get closer to the market and extend their service to the aftermarket, used car business and mobility, so to further strengthen the aftersales and improve the customer satisfactory and loyalty. This will also allow the cooperative dealers to have a better business perspective.