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‘New normal’ accents collaboration
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When the BMW National Sales Competition of Excellence 2015 was held last month by the German carmaker’s China Training Academy, the stage was set to not only boost the performance of dealerships but also to raise the morale of retail foot-soldiers.
These are interesting times for big premium carmakers like BMW. Xiao Yi, director of the academy hit the nail on the head in opening remarks to media, when she catalogued the convergence of challenges for the company in the world’s largest car market.
She ticked them off: slowing economic growth, a government anti-corruption campaign that frowns on ostentation, restrictions on vehicle purchases and use, anti-monopoly enforcement, parallel import policies, a flood of premium brands into local production and a more aggressive stance by smaller rivals.
The message: dealerships and carmakers have to work more closely together in order to weather the market volatility.
Indeed, China’s premium car segment has shifted into a lower gear after double-digit expansion during the past decade. In the first seven months of this year, sales in that sector inched up only 4 percent from a year earlier.
China’s leaders talk about the “new normal” in the economy. But for carmakers, the transition away from the boom days is difficult. One strategy many are adopting is diversified income streams. They are expanding into vehicle financing, after-sales services, auto accessories and even used cars, Xiao said.
That requires teamwork, participants at the sales competition were told.
One of the finalists in a competition embracing more than 6,000 BMW dealership staff was a sales manager from Changsha, capital of Hunan Province, who engineered a significant rise in financial services penetration.
“We didn’t try hard enough in the past to introduce auto financing services,” the sales manager said. “Premium car shoppers are not short of money, but can actually use these services to benefit themselves.”
The big challenge faced by dealerships is how to manage all the various staff needed to give customers comprehensive services, from technicians, salesmen, services mentors, up to management, said Joachim Geissler, vice president of qualification and retail human resources of the BMW Group.
If the cool-down in China’s premium car market is an inevitable part of its evolution towards more maturity, so is the development of professional staff to manage the transition. The current situation provides an opportunity for the training academy to use its standardized and specialized approach to help dealerships mature along with the market.
The training structure for BMW dealerships is two-dimensional. Days of initial certification training for everyone in the five main functions are followed by years of individualized, focused training.
This structure is believed to be critical in helping dealerships retain talent and also in etching a visible differentiation in the quality of repair and maintenance work. Competition in that realm has increased after China’s anti-monopoly campaign sweeps various industries.
A new rule is expected to be announced this month requiring carmakers to make available repair and maintenance specs that have until now been reserved for their franchise dealerships.
BMW has experience coping with these issues in its European home market, where it provides related information and also training to independent repair shops. But there is no big demand to be honest, said Geissler, who doesn’t see the policy change as a threat.
Maybe in the beginning, there is a rise in demand for independent repair services, but that soon trails off because they don’t live up to the expectations of BMW services, lacking knowledge or equipment. Delivery of quality services doesn’t come down to one training. It is really about a career path, he added.
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