Beijing Mercedes-Benz and Mercedes-Benz China sales channel integration out of control and defeat

This is another battle of Daimler-Benz in China. There is no peace.

Beijing Mercedes-Benz and Mercedes-Benz China's sales channels have finally integrated into the stage. This is the choice that the two sides were forced to make after several disputes. There are two pressures. First, Mercedes-Benz wants to expand sales in China to compete more directly with Audi and BMW. This can be seen as a strategic pressure; First, Mercedes-Benz must implement further localization and reduce costs. Must cooperate with BAIC Group, this can be seen as its profit pressure. In the role of these two forces, Daimler Benz needs to integrate Beijing Benz sales channels with the sales channels of Mercedes-Benz China imported cars.

Therefore, BAIC and Daimler Benz are frequently acting. The first is the signing of a framework cooperation agreement at the group level, where the shareholders of both parties register and expand production capacity. After that, both parties began to integrate marketing channels.

In this necessary change, BAIC Group has always been in a weak position. This car group can't get enough powerful chips to get equal benefits from it. The only thing that can be used is to master the physical factory of Beijing Benz. Under the condition that China controls the joint venture, BAIC can only use this rule to deal with it. However, what has happened indicates that the water depth is abnormal.

Now, the main conflict between the two sides is concentrated between the sales force of the Beijing Benz system and the sales force of Mercedes-Benz imported cars. As the current Mercedes-Benz imported cars have an absolute advantage in sales, the dealers operating Mercedes-Benz domestic models are in a corresponding weakness. Therefore, the outcome has been divided. This is obviously not the result that Beijing Mercedes-Benz and Mercedes-Benz China hope to see. However, it is not so easy to make thorough adjustments.

Among the distributors who operate imported cars, Lixingxing and Renfuxing, as well as independent Mercedes-Benz import car dealers, are already in a game of intermittent succession. Among them, the most critical reason is from Lixingxingxing. Apart from being a distributor, this large-scale distributor is also one of the shareholders of Mercedes-Benz China Sales Corporation and holds 49% of the shares of the sales company. This dual identity determines that the contradiction is in a state of no solution. The more subtle relationship is that the relationship between Li Xingxing executives and Daimler Benz executives is very high. Because of this, the controversy surrounding Li Xingxing is not continuous.

In January 2010, the German "Economic Weekly" reported the complaints of the China Automobile Dealers Association on Li Xingxing, requesting the temporary suspension of Mercedes-Benz's import license. Among them, the most concern was the conflict between the acquisition of Zhejiang Mercedes-Benz dealers and Li Xingxing. The matter finally disappeared. Neither the parties nor Daimler-Benz, who is far away from Germany, have changed the position of Li Xingxing. A few months later, when Daimler-Benz CEO was asked about this, he responded with “With further development of Daimler in China, we are giving full consideration to the cooperation with Lixingxing”. This profound meaning is worth pondering.

In March 2011, Beijing Benz wanted to integrate sales channels and implement a double-limit policy (“Price Management and Recovery Plan” and “Sales Area Management Policy”), which directly publicized the competition between Beijing Benz sales channels and imported Mercedes-Benz sales channels. . This incident triggered a fierce rebound. Some two government agencies and the media publicly bombarded Beijing Benz. But the facts are far from simple.

This policy was initiated by Beijing Benz and is intended to hedge the advantages of imported Mercedes-Benz dealers to terminal sales prices and to stabilize domestic Mercedes-Benz dealers. The behind-the-scenes force of publicizing this issue and expanding the interpretation came from Li Xingxing. This puts tremendous pressure on Fu Qiang, who has just received sales from Beijing Benz. Fortunately, Beijing Auto Group gave enough trust and support, things gradually diminished. However, it does not mean that Li Xingxing can accept the proposal of Beijing Benz. In other words, after this stroke, the contradiction becomes deeper.

According to a public statement, in August 2011, Li Xingxing’s protective agreement with Daimler Benz expired. Just at this time, Beijing Benz and Mercedes-Benz China have integrated sales networks. According to information available to me, even if the agreement expires, it cannot fundamentally change anything. At least for a while, it is difficult for Beijing Benz and Mercedes-Benz China to make any substantial changes to Lixing.

Li Xingxing has mastered nearly half of the dealer network in Mercedes-Benz China, and more than 40% of its profits. Any major changes to Li Xingxing will directly touch the interests of Mercedes-Benz China. Far-sightedness may lead to direct sales of Mercedes-Benz in China. Mercedes-Benz China does not have enough reason to abandon its due interests. Unless Beijing Benz can compensate.

For Beijing Benz and BAIC Group, if it is not possible to achieve localization of more products and the sales volume of the products is greatly increased, it will be difficult to change the status of non-profitability. This must first change Lixingxingxing. In short, the most important driving force for this change comes from Beijing Benz’s China. In Lixingxing and Mercedes-Benz China, there is no gratis gold medal given by the Chinese government authorities.

Therefore, the integration of sales channels between Beijing Benz and Mercedes-Benz China is between loss of control and failure. If you do not choose these two cases, the only alternative is a compromise agreement, which is also between loss of control and loss. (To be continued)