FAWHunanTradingCo.LtdINTERVIEWDATE:5May2025INTERVIEWERNAME:JaneXuIntervieweeNameMr.DanYuejingPositionViceGeneralManagerCompanyandAddressFAWHunanTradingCo.LtdTelephone/Fax0731-4721818ShortSummaryLiketheothermaindealersinChangsha,FAWHunanTradingCo.Ltd.Alsosufferlotfromthefrequentchangeofprovincialmanager,more,thecompanyfeelsomehowlossofbeingtreatedthesameasothertwodealerswhodonotneedtoshareprofitwithFAWBackgroundFAWHunanTradingCo.Ltd.istheJointVenturebetweenFAWandHunanAutoTradingGroupestablishedin1987.Now,FAWcontrol55%ofthesharewhileHunanAutoTradingtake45%.TotalcurrentfixassetofthecompanyisRMB40million,FAWsharetheannualprofitwithFAWHunanTradingCo.Ltd;AccordingtoMr.Dai,thereareonly6suchprofitshareddealersinChinaamongwhichFAWHunanCo.Ltdisthelargestone.ItsoldallFAWbrandcarsincludingtruckandpassengercar.(LastyearTruck400,Passengercar430).Totalinventoryspace120,000m2(8,000m2forJieFang),thereisa2000m2servicestationforpassengercars(HongQi,AudiandJetta)Thereare3majordealersinChangsha:FAWHunanTradingCo.(Dealer1),1999trucksalesvolume390FAWHunanTradingCo.Ltd(Dealer2),1999trucksales261FAWChangshaServiceStation(Dealer3),1999trucksales204KeyIssuesFAWHunanTradingCompanyisthefirstdealerofFAWtruckinHunan,in1987,FAWonlydotruckbusinesswithit,butastimegoesonFAWstartedtoselectotherlocaldealers.Thishasseverelyintensethepricecompetitionandreducetheprofitperunit,Mr.DaisaidFAWshouldreallycareitslong-terminterestintheprovinceandtakecareofitsprofit-shareddealer.Mr.Daicontributethephenomenontothefrequentchangeoftheprovincialcompanymanagers,mostofthemwanttosellasmanyaspossiblethroughdifferentdealersintheirownyears(7managershavebeenchangedinthepast5years)Keycustomerbase:90%isindividualbuyerintransportationbusiness;10%isSOEtransportationteam1FAWtruckarenotwellsoldinHunanmarketsincemostoftheend-usersarehighlyprice-sensitiveTransportationfeeincludedintheretailpriceperDongFengtruckismuchlowerthanJieFang’sRMB2691.(FAWChangchunis3000kmawayfromHunanwhileSAWonlyhundredsofkmaway)DongFengtruck’sdumpingtendency—discountedtruckseverywhereIt’shardtopredictend-userschangingdemandinHunanProfitpertruckisaround1000,thisismainlyfromrebate,Retailpricedifferunitbyunitaccordingtothebargainresultofeachdeal,currentsalespriceisalmostequaltoAnetworkprice.Overallcostin1999:RMB2millionRebatingsystemisnotclear,Mr.Daisaidhecouldhardlypredicttherebaterevenuetheycouldgetperyear.HepreferJetta’sclearrebatingsystem,whichisasystembasedondealers’performance:1.2%ifdealercouldpayincash0.8%ifdealercouldprovidedraftimpawn0.4-0.6%ifdealerhasservicefunction0.4%ifdealerinvestinBrandImagebuilding0.6%ifdealeradoptsuggestedorganization0.6%ifdealeradoptperformancemeasurementandmotivationsystem………Sum:Maximum5%oftheannualsalescouldbebacktotheJettadealerasrebateifheisqualifiedfortheaboverequirementsMr.DaisuggestFAWchoosethe“YiKuChe”warehouselocationscientifically.Currently,warehouseofJieFang“YiKuChe”inChangshaislocatedatFAWChangshaServiceStation,thisisnotfairfortheothertwodealerssincetheycouldhardlyknowtheinventorylevel,more,FAWpayfortheinventoryplatleaseperyearFAWshouldbetterchangesomeofthetruckcomponenttolowertheoverallpurchasingcostofend-users.Forexample,the14-layertierisnotfitforthelong-distancetransportation,almostalltheend-userchangeitto16-layertierafterpurchasing(7tiersalltogether),changecostaround3K,theytakethe3Kintoconsiderationaspartofthetotalcost.ActuallythechangingcostinsidetheFAWisonlyaround1KR&DdepartmentinFAWisslowinresponsetowardsthemarketdemand.2RebatesystemofJettaAttitudetoward3in1Mr.Daiisnotwillingtocarrythelarge3in1investment(estimatednolessthan8million)outbeforehecouldseeanystrongcommitmentfromFAWtowardshiscompany.Mr.Daisaidhefeelun-safeoftherelationshipwithFAWsinceFAWprovincialbranchusedtothreatenthecompanyofstoppingitstruckdealershipifitcouldn’tachievetheannualdelegatedsalestask.InHunan,theestablishmentoftruckservicestationcausesnegativeprofitandwillnotattractdealersonlyifFAWcouldproviderelatedpolicyallowdealerswhohaveservicefunctionsgainbacktheirmoneyinautosales.Mr.DaisaidJettahas2servicestationinChangsha,theyalllosemoney;currentlyanewoneisunderconstruction;WhythedealerisstillkeenonestablishingJettaservicestationisthatthetheycouldgettheadvantagepolicyfromFAWinauto-saleswhichcouldmakeuptheirloseintheservicepart3