The Future Of China's Automotive Retail Sector

By Author: Jebsen
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In 2014, China's economy grew by 7% year-on-year. While this may be an enviable figure by Western standards, it is the lowest growth that China has recorded since 2009. The consequential impact on the automotive retail sector has been quite evident—the passenger car segment rose by just nine per cent in the first quarter of 2015, fueled mainly by sales of domestic low- to mid-end SUVs.

For 2015, the luxury car segment's growth forecast has been pegged at the 10 per cent market. But Jebsen Motors and its flagship brand-under-representation Porsche have managed to outperform the market, coming in at a year-on-year increase of 14 per cent in the first quarter.

To this, Mr Joachim Eberlein, Managing Director of Jebsen Motors, said: "Our business operations have been steadily growing. Despite lukewarm economic conditions and stiffening industry competition, we were able to deliver over 8,000 new Porsche cars in 2014. This was an all-time high for us and a 25 per cent increase from our 2013 results. We are confident of writing another chapter of success for Jebsen Motors in 2015."

This remarkable performance ...
... comes from Jebsen Motors' continued commitment to growing its number of dealerships as well as the continuous process improvement and qualification of its workforce. After Jebsen Motors opened the largest Porsche Centre in Asia in Shanghai in October 2013, it opened a second Porsche City Showroom in Kowloon, Hong Kong last year to complement an existing presence in Wan Chai. Its Porsche Centre Shanghai Puxi underwent major upgrading and expansion works to become one of the largest Porsche showrooms in Asia, located in the heart of the city. In the last two months alone, Jebsen Motors opened a brand new standalone Body & Paint Centre in Hangzhou and a third workshop in Hong Kong.

These physical facilities are necessary but according to Mr Eberlein, investing in our people is the key for success.

"Our business depends very much on our people. In building strong, professional and motivated teams across all our centres, I am happy to report that we have become a team of highly professional auto enthusiasts that enjoys being part of the Jebsen Motors family," said Mr Eberlein.

Paving the way

Jebsen Motors is currently one of the largest Porsche dealer groups in the world, operating nine Porsche Centres in Mainland China, Hong Kong and Macau. In the Jebsen Group reorganisation effective January 2015, Jebsen Motors has become one of the four strategic business units.

"We consider ourselves as a part of the Jebsen family but we are also proud of our own identity as the representative of one of the most exciting brands in the world. We are fully aware of the significance of our operations to the Group and the responsibility we have towards its overall success. As a fully-fledged business unit now, I believe we have better flexibility to adapt quicker in the fast-changing automotive retail sector," said Mr Eberlein.

This organisational agility is anchored by four major pillars that Jebsen Motors has set out for itself as it works towards achieving its strategic goals.

1. Becoming the benchmark for both profitability and professionalism within the Chinese automotive industry

2. Exceeding customer expectations and delivering a personalized experience that builds 'customers for life'

3. Becoming Porsche China's most preferred partner and furthering the relationship with the Porsche brand

4. Becoming the best employer in the industry to recruit, reward and retain qualified talents

The business unit has also set additional short-term, operational goals for 2015. These include the successful opening of Jebsen Motors' latest Porsche Centre in Shenzhen. Signifying Jebsen Motors' continued investment and commitment to growing the Porsche brand, Porsche Centre Shenzhen will be yet another state-of-the-art facility that is presently on track for completion in August.

This year will also see Jebsen Motors growing its operations in Hangzhou with an extension of its existing showroom—a move to better serve customers in the region and sustain its market share in the face of intensifying competition.

Same but different

In serving the Mainland China and Hong Kong markets, Jebsen Motors concedes that there are differences. Having been exposed to the brand for six decades, Hong Kong customers, many of whom choose Porsche for its advanced technology and unrivalled performance, show deeper brand awareness, understanding and loyalty. Porsche sports cars are a popular choice among Hong Kong customers, while their Mainland Chinese counterparts prefer Porsche's SUVs like the Cayenne and Macan. Mr Eberlein revealed that over 80 per cent of Porsche sales in Mainland China come from these two models—following local market trends that have made the SUV segment the fast-growing one in the market.

Elaborating, he said: "Both markets are unique in their own way. Our marketing strategy does take this into consideration, especially in brand and product positioning. However, there are similarities too and this helps us to achieve economies of scale. Across all our markets, we have a common goal to exceed our customers' expectations and to be the benchmark in terms of customer satisfaction."

"In after-sales, our strategy is quite uniform. Regardless of market, customer expectations are similar—convenience and value for money. That is why our focus is to make it as easy as possible for our customers to get their cars serviced at a reasonable price," said Mr Eberlein.

In Mainland China, Jebsen Motors is currently the first dealership group to have piloted a real-time mobile booking application that allows customers to make a service appointment and receive instant confirmation via their mobile devices anytime, anywhere. This service is expected to be extended to all Jebsen Motors-operated Porsche Centres across Mainland China and Hong Kong by mid-2015.

This comes shortly after Porsche Centre Beijing introduced a thoughtful Airport Service last year. This arrangement allows customers to have their cars serviced while on business trips. All they have to do is leave their cars at the centre and a shuttle service will take them to and from the airport. By the time they return, their serviced car will be waiting for them. Jebsen Motors hopes to introduce this service at all its Porsche Centres by year-end.

In addition, Jebsen Motors is also piloting a Fast Lane Service concept in Hong Kong. The idea is to serve walk-in customers with little to no waiting time. The prerequisites to a service like this are an intelligent workshop management system, lean processes and high efficiency, noted Mr Eberlein. While recognizing that there is a learning process involved, he is confident that Jebsen Motors will be ready to roll out this service to all centres within the year.

Going farther

With its impressive performance in 2014 and the exciting plans laid out for 2015, Jebsen Motors is looking forward to celebrating the 60th anniversary between Jebsen and Porsche with aplomb.

"The colleagues who signed our first importer agreement with Porsche in 1955 were true visionaries. At the time, Hong Kong was a small city with a population of 2.5 million and less than 170km of roads. It took courage to invest in a sports car brand, much less one that was not yet well known in Asia. That October, the Porsche 356 arrived in Hong Kong, marking the start of an extraordinary and enduring relationship between Jebsen and Porsche," shared Mr Eberlein.

"Porsche is a great sports car brand and Jebsen is an organisation that understands Greater China. This makes us a perfect fit. But for us to have lasted six decades, I believe there is more at play. We share similar corporate values and a dedication to always placing our customers first. We have also made continuous efforts to build and maintain mutual trust, respect and commitment," he said.

"Business performance is also a consideration, of course. Even the best business relationships will crumble if the partners are not successful and the agreed targets are not met. As representatives of the Porsche brand in Greater China, we have done well for our customers, our partner and ourselves—creating a winning situation for all parties. I believe these are the reasons why the Jebsen-Porsche relationship has gone the distance and why our future remains solid and promising."