ShanghaiDiyiFAWServiceStationINTERVIEWDATE:March19th,2000INTERVIEWERNAME:AnneWangIntervieweeNameMr.ZhangGuo-rongPositionDirectorCompanyandAddressShanghaiDiyiFAWServiceStationNo.480TianShanRd,Shanghai200051Telephone/Fax(021)62343409BackgroundKeyIssuesConclusionsBackgroundShanghaiDiyiFAWServiceStationisestablishedin1985.ItsparentcompanyisShanghaiAutoRepairFactory.TotalFTEsofShanghaiDiyiFAWServiceStationisaround50,amongthemlessthan20worksforSparePartsSelling.Lastyear'spartssellingandserviceincomeislistedbelow:Warrantycompensation300,000RMBOut-of-warrantyincome2-3MillionRMBSparepartsselling3-4MillionRMBTotal6MillionRMBInShanghaimarket,out-of-warrantyservicechargeishigherthanthatofothercities.UsuallyShanghaiDiyichargesthehourlyexpenseatFAWrate(11.7RMB/hour),butwithlongerworkhourstandard.Asit'sveryhardforpass-bytruckstoacceptsuchahighprice,ShanghaiDiyimainlyserviceslocaltrucks.AnotherreasonforShanghaiDiyitofocusonlocalmarketisitslocation.Asanoldservicestation,ShanghaiDiyilocatesincentreareaofthecity.Out-of-citytrucksarenotallowedtogointoShanghaiCityareaindaytime.Thus,onlyunderverysevereandurgentcircumstancewillthepass-bytruckscallShanghaiServiceStationforhelp.Unlikeothercities,maincustomergroupforShanghaiDiyiislargefleetcustomerwithatleast5trucks.AccordingtoMr.Zhang,almost80%ofitscustomerismediumtolargefleets.In1999,aroundonethirdofthetrucksShanghaiDiyiservicedismediumtrucks,aslargefleetsinShanghaipurchasedquitealotofmediumtrucksin1999.1ShanghaiDiyidoesnothaveatrucksaleslicense,butitcanselltrucksthroughitsparentcompany.However,lastyearonlytwotrucksaresold.ThoughShanghaiDiyihasanintentionfortrucksalesbusiness,Mr.Zhangisnotveryoptimisticinthisbusiness,astherearealreadythreebigandpowerfuldealersinShanghaiwhohavepriceadvantages.30%ofsparepartsaredirectlysourcedfromShanghaiSparePartsCentre.RestofthepartsissourcedfromFAWsuppliersdirectly.Reasonsforthatare:PartsspeciesinPartsCentreisnotenough.PricefromPartsCentreishigher(usually10%higherthanFAWsuppliers)DeliveryperiodofPartCentreisaslongas45-60days,whileFAWsupplierscansendtherequiredpartsinoneweek.ServicefromFAWsuppliersisbetter.Somesupplierscandeliverpartsinadvance,andgetbackpartswithqualityproblems.Mr.Zhangisconfidentinitspartssalesbusiness:30%ofpartsaregotinstandardpriceofferedbypartscentre.Other70%aresourcedfromFAWsuppliers.Toensurethequality,Mr.Zhangwon'tsourcepartswithapricemorethan10%lower.RetailpriceforAss'ypartsis3-5%higherthanstandardprice.RetailpriceforSmallpartsis10-15%higherthanstandardprice.Mr.Zhangthinksthattheprofitabilityofpartssalesisfarhigherthanthatoftrucksales.Hebelievesthatthemargincouldbeevenhigherwhenthequalityortechnicalcontentofpartsishigher.KeyIssuesMr.ZhanghopesthatFAWcanprovidethetechnicalmanualandpartscatalogueofnewtrucktypesinamorepromptmanner.It'sverydifficultfortheservicestationtoservicethenewtruckswithnotechnicalmanualinhand.Sparepartssupplyisneithersufficientnorprompt.AccordingtoMr.Zhang,FAWtruckservicedepartmentcangettheinformationofpartsdemandeasilythroughdealers:whencertaintrucktypesstarttosell,somepercentageoftheeasy-wornpartsforthistrucktypeneedstobeproducedanddeliveredtopartscentres.Thereisnofavouringpolicyforservicestationtoselltrucks.Mr.ZhangwishtohavesomepolicyifFAWreallywantstoencourageservicestationstobe3in1dealers,asmostofservicestationslackscapital.ConclusionThemarketconditionandstrategyofShanghaiDiyiisdifferentfromservicestationsinothercities.AsservicechargeinShanghaiisveryhigh,ShanghaiDiyi'smaincustomersarelocal,largefleetswithstrongcapitalbackground.ShanghaiDiyiServiceStationdoesnothavetrucksalesbusiness,astherearealreadythreebigdealersinShanghaimarket.2