Automotive News - February 4, 2008 - (Page 84) 84 • FEBRUARY 4, 2008 INSIGHT China dealers to take tour of U.S. retailing Alysha Webb alyshawebb@yahoo.com D Manheim’s Mark Brunn, left, and Neville Green want to familiarize Chinese dealers with U.S. retailing in hopes of drumming up business in China. on’t be surprised if you run into a group of Chinese auto dealers in a U.S. showroom this year. They aren’t tourists. Instead, the 12 dealers, who have yet to be selected, will be on a learning mission. Manheim, the largest U.S. vehicle auction company, and the China Auto Dealers Chamber of Commerce want to introduce the dealers to leading-edge retail practices. Manheim hopes the tour it is cosponsoring will boost demand for its services in China. “I’ve never spoken to a Chinese dealer who hasn’t had their eyes opened by visiting a U.S. dealer or auction,” says Neville Green, who heads Manheim’s China operations. “They need to understand what Manheim has to offer.” Wang Xiaodan, secretary-general of the China auto dealers group, said she wants to alert dealers to new business possibilities. “The objective of this trip isn’t a vacation,” she told Automotive News. The chamber is a quasi-governmental body formed last year. It aims to give China’s 70,000 dealers a voice in the formation of industry regulations. Coming to America Manheim and the China Auto Dealers Chamber of Commerce are bringing Chinese dealers to the United States this year. Here’s what each group hopes to gain from the tour. Chamber: Give dealers an idea of new business possibilities Manheim: Show dealers what auction company can do for them Dealers: Meet U.S. counterparts and share ideas To-do list Wang, 42, a former auto industry reporter, lists what she expects dealers to get from the U.S. trip: A better understanding of multifranchise dealership groups. “As dealership groups develop, they are considering selling multiple brands,” Wang said. “That way, their ability to fight risks is greater.” Knowledge of how to use capital markets for funding. “At first, dealers used their own cash to start up.” Wang said. “They even thought using loans would mean a loss of face.” U.S. contacts for possible cooperation in China. Diversification of business areas. “New-car sales margins are getting smaller and smaller,” Wang said. “Dealers need to consider other ways to make money after the sale — for example, the secondhand market, leasing, and spare parts and repairs.” Last year, China’s light-vehicle market grew 21.0 percent to 5.2 million units, according to Automotive Resources Asia Ltd., a division of J.D. Power and Associates. China’s usedvehicle market is small now, but Wang said it is only a matter of time before it becomes the world’s largest. That’s where Manheim comes in. Much information about used vehi- cles — such as previous owners and repair history — now is unavailable in China. Data from a well-known company such as Manheim would help the market flourish, Wang said. Mark Brunn, Manheim’s vice president of international operations, agrees. “Among developing countries, which ones have the best potential to give us a return 20 years from now?” Brunn says. “China is one of the best opportunities.” Changing mind-set? Development of China’s used-vehicle market will require tax reform, experts say. China now taxes dealers on a vehicle’s full value several times during the sales process, discouraging dealers from acquiring used vehicles. By contrast, brokers who take cars on consignment avoid that tax burden. Manheim’s Green says his company has recommended that the Chinese government end the disparity in taxation. The mind-set of Chinese consumers also needs to change, Wang said. Almost all Chinese vehicle shoppers are first-time buyers, she said, and they want new cars. But Wang said she sees a gradual shift: “Consumers are starting to think, ‘I can’t afford to buy a new Audi now, but I could buy a secondhand Volkswagen Jetta to start with.’ ” c Bidders at a Manheim auction in China include dealers as well as individuals looking for bargains. China’s used-vehicle market is small now, but Wang Xiaodan of the China auto dealers group says it is only a matter of time before it becomes the world’s largest. http://www.vectrix.com
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