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Auto-racing buffs pursue profit in sport
By Lu Nengneng |
August 22, 2011, Monday
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Print Edition
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IT'S five minutes to starting time. All drivers in Group C are set to compete in cars modified by their respective teams' own engineering workshops. All eyes are on winning the trophy. An outburst of cheers. Dozens of cars kick up dust as they take off before the breathless crowd.
Shanghai's Tian Ma Touring Car Race is the most popular seasonal amateur car racing event in eastern China. For Paul Wang, manager of team SCT, it's not just about auto racing but also about business marketing.
"We are here to promote our car modification business," said Wang. "The best way to impress potential customers is to show them how we push a car's performances to perfection on the circuit here."
SCT Racing was founded in 2008 by five car racing enthusiasts to promote a more legitimate image after the sport suffered from earlier ties to illicit street races that led to a sweeping police crackdown and forced it to go underground.
"The business and the sport are now even more closely connected because many racing teams have come to realize that their sporting obsession needs a sustainable way to provide for itself," Wang said.
SCT earlier this year relocated its workshop from a remote area of Pudong to Wenshui Road, which has become one of the best-known areas in Shanghai for car modification. The business sells imported auto products and offers performance upgrades for car racing lovers all over the city.
When it was first started, SCT operated more like a club than a business. Another ten members later joined the original five and chipped in to invest. They weren't initially too worried about profits because they had other jobs to support themselves. Wang, for example, is an architect.
"This original model would have worked for quite awhile had not the sudden economic downturn bit into everyone's wallet," Wang said.
So Wang volunteered to be part-time manager of SCT and started looking for sponsorships. He ended up nailing down a few goods suppliers providing parts such as engines, clutch boxes, brakes, exhaust pipes and lubricants at a discount. Some of the deals were even exclusive, like the one with SCT Computer, a US-based professional car-tuning equipment maker that eventually appointed the team as its nationwide China sales agent.
"That's how we got our name," Wang said. "Most of our sponsors are foreign brands eager to break into China, and they expect us to leverage our connections in the community to market their names."
Market response was positive after SCT put auto parts left over from competition on sale. Though the income flow wasn't always stable, it did give SCT the insight to see that more money could be made if the quality of those products could be demonstrably shown to customers at live races.
Positioning itself more as a service provider today, SCT's workshop markets its mechanical refitting and computer fine-tuning as its main selling points. The two, according to Wang, account for 40 and 60 percent respectively of the set-up job for a racing car and are directly tied to race outcomes.
"Each competition is a good opportunity to learn," Wang said. "And the Tian Ma Race is one of the best places to put our latest research and development results to the test."
Wang's eyes closely follow the progress on the track as a Ford Focus bearing the SCT banner manages to overtake a contender on a curve. The car, SCT's main competitive model in Group C, is equipped with SCT-made parts, including shock absorbers, brake disks and reinforcements.
"We are not afraid of taking some detours when experimenting new things," Wang said. "We are trying to present something different while other workshops only copy each other's modifications."
Customers are getting pickier nowadays and aren't easily influenced by racing cliches, Wang said. That presents technical challenges for SCT.
Many customers are also very tech-savvy, Wang added. They come with full-fledged plans in their heads, and sometimes even detailed blueprints. That makes it harder to steer clients to more expensive options and squeeze out more profit.
But Wang said they are happy with the money they have made. SCT's monthly revenue has climbed to between 40,000 yuan and 50,000 yuan (US$6,268 and US$ 7,825). It is enough to pay the rent for a 300-square-meter garage and meet the payroll for four full-time mechanics and three part-time painters. But serious profit is more elusive.
Wang estimated that each team member has spent at least 100,000 yuan so far on building up the workshop and getting their cars modified to qualify for the competition. The expenses for the latter are usually three times a car price.
"It is a business owned by all of us, and it's also a leg of the life journey that we all shared," Wang said. "Birds of a feather flock together. We run this workshop not just for money but out of the same passion."
Wang said he would like to see more cars rolling out of their garage to wow the crowds. Nothing is more exciting than turning a BYD F0 into a superstar, he said.
Selling for around 30,000 yuan, the BYD F0 is a modest model made by domestic automaker BYD, which is partly backed by Warren Buffett's Berkshire Hathaway Inc. The car is expected to compete on behalf of SCT in Group D racing later this season, and its performance will be a true test of whether the workshop can really make any car shine on the circuit.
"But what matters most is the signal it sends," Wang said. "The sport once exclusive to the nouveau riche is becoming more affordable to ordinary people. And that's what a sports-driven industry like car modification can count on in the long haul."
The crowds in the stands burst out into cheers again as dozens of cars flash across the finish line. SCT's Ford Focus takes top honors. Time for celebration.
"This race is over, but the business has just started," said Wang philosophically.
Shanghai's Tian Ma Touring Car Race is the most popular seasonal amateur car racing event in eastern China. For Paul Wang, manager of team SCT, it's not just about auto racing but also about business marketing.
"We are here to promote our car modification business," said Wang. "The best way to impress potential customers is to show them how we push a car's performances to perfection on the circuit here."
SCT Racing was founded in 2008 by five car racing enthusiasts to promote a more legitimate image after the sport suffered from earlier ties to illicit street races that led to a sweeping police crackdown and forced it to go underground.
"The business and the sport are now even more closely connected because many racing teams have come to realize that their sporting obsession needs a sustainable way to provide for itself," Wang said.
SCT earlier this year relocated its workshop from a remote area of Pudong to Wenshui Road, which has become one of the best-known areas in Shanghai for car modification. The business sells imported auto products and offers performance upgrades for car racing lovers all over the city.
When it was first started, SCT operated more like a club than a business. Another ten members later joined the original five and chipped in to invest. They weren't initially too worried about profits because they had other jobs to support themselves. Wang, for example, is an architect.
"This original model would have worked for quite awhile had not the sudden economic downturn bit into everyone's wallet," Wang said.
So Wang volunteered to be part-time manager of SCT and started looking for sponsorships. He ended up nailing down a few goods suppliers providing parts such as engines, clutch boxes, brakes, exhaust pipes and lubricants at a discount. Some of the deals were even exclusive, like the one with SCT Computer, a US-based professional car-tuning equipment maker that eventually appointed the team as its nationwide China sales agent.
"That's how we got our name," Wang said. "Most of our sponsors are foreign brands eager to break into China, and they expect us to leverage our connections in the community to market their names."
Market response was positive after SCT put auto parts left over from competition on sale. Though the income flow wasn't always stable, it did give SCT the insight to see that more money could be made if the quality of those products could be demonstrably shown to customers at live races.
Positioning itself more as a service provider today, SCT's workshop markets its mechanical refitting and computer fine-tuning as its main selling points. The two, according to Wang, account for 40 and 60 percent respectively of the set-up job for a racing car and are directly tied to race outcomes.
"Each competition is a good opportunity to learn," Wang said. "And the Tian Ma Race is one of the best places to put our latest research and development results to the test."
Wang's eyes closely follow the progress on the track as a Ford Focus bearing the SCT banner manages to overtake a contender on a curve. The car, SCT's main competitive model in Group C, is equipped with SCT-made parts, including shock absorbers, brake disks and reinforcements.
"We are not afraid of taking some detours when experimenting new things," Wang said. "We are trying to present something different while other workshops only copy each other's modifications."
Customers are getting pickier nowadays and aren't easily influenced by racing cliches, Wang said. That presents technical challenges for SCT.
Many customers are also very tech-savvy, Wang added. They come with full-fledged plans in their heads, and sometimes even detailed blueprints. That makes it harder to steer clients to more expensive options and squeeze out more profit.
But Wang said they are happy with the money they have made. SCT's monthly revenue has climbed to between 40,000 yuan and 50,000 yuan (US$6,268 and US$ 7,825). It is enough to pay the rent for a 300-square-meter garage and meet the payroll for four full-time mechanics and three part-time painters. But serious profit is more elusive.
Wang estimated that each team member has spent at least 100,000 yuan so far on building up the workshop and getting their cars modified to qualify for the competition. The expenses for the latter are usually three times a car price.
"It is a business owned by all of us, and it's also a leg of the life journey that we all shared," Wang said. "Birds of a feather flock together. We run this workshop not just for money but out of the same passion."
Wang said he would like to see more cars rolling out of their garage to wow the crowds. Nothing is more exciting than turning a BYD F0 into a superstar, he said.
Selling for around 30,000 yuan, the BYD F0 is a modest model made by domestic automaker BYD, which is partly backed by Warren Buffett's Berkshire Hathaway Inc. The car is expected to compete on behalf of SCT in Group D racing later this season, and its performance will be a true test of whether the workshop can really make any car shine on the circuit.
"But what matters most is the signal it sends," Wang said. "The sport once exclusive to the nouveau riche is becoming more affordable to ordinary people. And that's what a sports-driven industry like car modification can count on in the long haul."
The crowds in the stands burst out into cheers again as dozens of cars flash across the finish line. SCT's Ford Focus takes top honors. Time for celebration.
"This race is over, but the business has just started," said Wang philosophically.
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