Recently, the China Insurance Industry Association and the China Association of Automobile Repair Industry (hereinafter referred to as the “Two Associations”) jointly published the second batch of research results on the zero-to-total ratio of common domestic vehicles. At this point, the two associations have publicly disclosed the latest zero-to-total ratio data of 36 common models in China. Among the 18 newly added models, the highest coefficient of zero-to-total ratio for the entire vehicle is Renault-Korea’s 719.75%, and the lowest is 230.98%.

Although there is no zero-to-total ratio of up to 1273% as in the first batch of 18 common models, the zero-to-total ratio of 719% in the second batch of 18 models still makes people feel unreasonable because of the international auto parts and components. The ratio of the price to the sales price of the vehicle is more than 2-3 times.

Four major reasons for car zero-to-high ratios

Some auto market commentators believe that after half a year, the high prices of auto parts and the huge profits still exist in the after-sales market are caused by many reasons. In addition to the inherent deficiencies in the “Implementation Measures for Automobile Brand Sales Management”, it is also due to irrational consumers, inadequate market competition, and vendors’ desires to make shows.

After working in the Dazhou auto industry for nearly 6 years, Mr. Ren, a senior manager of a 4S store in Dazhou, discussed with reporters: “At present, consumer behavior is still not mature, and the proportion of first-time car buyers accounts for the majority, which is very likely to be affected by the popularity of car sales. Their own choice: Some consumers only buy expensive and do not buy right, blindly follow the trend, and encourage the upper reaches of the industry chain to be completely fearless, resulting in an overall defect ratio of zero."

Insufficient market competition, mismatched capacity structure and market demand, and insufficient supply of some well-selling models have led auto manufacturers to ignore the legitimate rights and interests of consumers, and have improperly taken up improper profits in the aftermarket.

Under the anti-monopoly pressure of the auto market this year, some manufacturers have reduced the prices of engine and transmission assembly with low replacement frequency in order to avoid being suppressed, while the prices of frequently-changing wearing parts have not been adjusted or even increased. In the “West China Cheyou Club”, a Passat rider said: Anti-monopoly movement is so big, some car companies have also made adjustments to spare parts prices, but he did not feel the recent 4S shop repairs To reduce the cost of repairs, it is sometimes found that the cost of repairs does not fall.

In a comprehensive view, the health of the automotive aftermarket will depend on the maturity of the consumers, the adequacy of market competition, and the development and expansion of the automotive maintenance companies in each format.

Policy adjustment or make the car zero-to-turn ratio reasonable

In September 2014, the Ministry of Transport, the National Development and Reform Commission, the Ministry of Education, the Ministry of Public Security, the Ministry of Environmental Protection, the Ministry of Housing and Urban-Rural Development, the Ministry of Commerce, the State Administration for Industry and Commerce, the State Administration of Quality Supervision, and the 10 ministries and commissions of the China Insurance Regulatory Commission jointly issued the “About Promotion”. “Guiding Opinions on the Transformation and Upgrading of Auto Maintenance Industry and Improving Service Quality” requires “removing the monopoly of repair parts and channels, and encouraging original parts manufacturers to provide original spare parts and independent aftermarket accessories with their own brands, trademarks or logos to the auto aftermarket. Encourage authorized maintenance companies to resell and provide original spare parts to non-authorized maintenance companies. "The establishment and implementation of a system for the disclosure of technical information on vehicle maintenance shall ensure that all maintenance companies are equally entitled to the right to obtain vehicle maintenance technical information from automobile manufacturers."

Breaking the monopoly of manufacturers on accessories, in the case of the government's effective supervision of the accessories market, consumers have the right to choose the right to purchase the corresponding brand accessories and to purchase the original parts with reliable quality. At the same time, the barriers that hinder the development of the auto maintenance industry and the establishment of diversified parts supply channels have been eliminated, allowing the industry to compete more fully and the market players to play a greater role. Consumers have also had a variety of options to enjoy equally reliable maintenance services.

The rise and expansion of automobile maintenance companies outside the 4S format will change the aftermarket profits and profits that are far more profitable than the sales of the entire vehicle. This will force the model to return to a zero return and truly benefit consumers.

The complete solution to the problem of zero-to-high ratio of stubbornness is that “car brand dealers should engage in car brand sales, after-sales service, and accessories within the scope authorized by automobile suppliers” in Article 25 of the “Implementation Measures for Automobile Brand Sales Management”. Provisions such as supply and other activities were amended to break down vertical monopoly.

Since the beginning of this year, the slowdown in the growth of China's automobile production and sales volume and the overcapacity of cars have sounded the alarm. The competition among major manufacturers for the market will become increasingly fierce. From the point of view of sustainable management, car companies must reduce their odds ratio to a level that everyone expects to attract potential customers, retain old customers, and increase their brand loyalty.


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