Xpeng Motors Reduces Sales Area by Half to 12 Areas, Transitioning from Direct Sales to Dealership Model

XPeng Motors just lately lowered the variety of nationwide gross sales areas from 24, as decided in March, to 12. They are additionally step by step phasing out underperforming immediately operated shops and increasing the dimensions of dealership shops.

At the distributor convention held in early September, XPeng Motors introduced the “Jupiter Plan”. A supply shut to XPeng Motors revealed that this plan is led by Wang Fengying, President of XPeng Motors in control of gross sales. The core initiative is to step by step substitute the earlier direct gross sales mannequin with a dealership mannequin.

This time, the nationwide gross sales areas shall be lowered to 12. This adjustment is made after the proportion of direct operation and licensed franchise channels has been modified, so as to have fewer and extra centered groups chargeable for exterior administration. At the start of this yr, XPeng Motors’ direct operation mannequin accounted for 70%.

In March of this yr, XPeng Motors internally merged the direct gross sales group of its automotive buying and selling system and the consumer growth heart group of its seller system, implementing unified administration. At the identical time, it adjusted the unique 4 main areas (North, East, Central, and South) to 24 extra segmented battle zones.

Adjusting the “Regional System” to the “District System” is useful for the corporate to promptly grasp frontline dynamics, improve total inner synergy, and reply extra agilely to intense market competitors. Li Auto operates on a provincial foundation, with provincial-level leaders managing retailer managers throughout the province. The objective is to conduct enterprise planning based mostly available on the market share of every province.

XPeng Motors regional managers are chargeable for the gross sales and profitability figures of the shops inside their administration scope. Store managers of immediately operated shops within the area report to the regional supervisor. Expanding from 4 main areas to 24 segmented battle zones can speed up the choice strategy of gross sales networks.

The regional supervisor has the authority to resolve on the finances for advertising and marketing actions and channels inside the area, in addition to the addition or discount of channels. If a immediately operated retailer has low return on funding, the regional supervisor has the best to shut it and switch it to different distributors or traders.

SEE ALSO: XPeng Motors Plans to Build 3,000 Supercharging Stations by the End of 2025

Recently, XPeng Motors has been screening and eliminating low-efficiency shops in its distribution channels, adjusting its community format. Sun Shaojun, the founding father of CheFans who has been paying consideration to the terminal marketplace for years, revealed in his dwell broadcast in August that XPeng Motors has began a brand new channel reform since June and has step by step closed down a number of poorly performing immediately operated shops.

Correspondingly, XPeng Motors is step by step growing its authorization ratio and introducing extra dealerships to third- and fourth-tier cities. During the Q2 monetary report convention name this yr, He Xiaopeng, Chairman of XPeng Motors, said that “we need to vigorously eliminate weak links in our sales network and introduce excellent dealership partners at a faster pace to accelerate market share expansion in second- and lower-tier cities.”

According to the recruitment standards printed on XPeng Motors’ official web site, licensed dealership working corporations will need to have a registered capital of a minimum of 10 million yuan (＄1.37 million) and annual income from automotive enterprise sectors exceeding 100 million yuan (＄13.7 million). Investment shops ought to be situated in mainstream car industrial areas in cities, with an precise usable space of a minimum of 1,000 sq. meters and a gross sales showroom space of a minimum of 300 sq. meters.

In phrases of the newly introduced recruitment cities, XPeng Motors is striving to increase its community protection to prefecture-level cities in every province. According to information from Jelanlu, as of the primary half of this yr, XPeng Motors has reached a complete of 530 shops, protecting 158 cities nationwide.

For XPeng Motors, dealerships possess plentiful channel assets and versatile funding for retailer institution. They can help XPeng Motors in lowering the monetary and operational burden of direct retailer institution and facilitate speedy enlargement into lower-tier markets.

In addition, increasing the dimensions of distributors is useful for leveraging Wang Fengying’s core seller assets accrued throughout the conventional automotive period. Industry insiders have praised Wang Fengying for her experience in advertising and marketing and gross sales providers, as she is in a position to successfully handle distributor channels with minimal assets, even attaining the identical stage of service as company-owned shops.

In reality, because the penetration price of recent power automobiles will increase, lowering the variety of direct-operated shops and increasing the dimensions of agent dealerships is turning into a brand new development within the trade.

In the early phases, one of the crucial direct benefits of the direct gross sales mannequin for brand spanking new power automobiles is to handle customers’ issues about buying such automobiles and supply them with a constant normal service expertise. The suggestions from shoppers is extra direct. Automotive corporations can even obtain unified value management and have stronger management over offline channels, avoiding disputes of curiosity with sellers.

However, as new power automobiles step by step seize the minds of customers, the market competitors turns into extra intense, and the drawbacks of asset-heavy direct gross sales fashions are step by step highlighted. Considering the market competitors stress and the demand for value discount, the company mannequin has turn into a extra possible selection. On one hand, agent dealerships can scale back the excessive prices of constructing shops underneath direct gross sales fashions whereas additionally having sensible expertise with native enterprise environments and aggressive landscapes. At the identical time, with growing gross sales of recent power automobiles and channel enlargement, sellers may help automotive producers save assets and rapidly broaden their markets.

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