Jia Jianxu, the General Manager of SAIC Volkswagen, is no exception. Two days before the show opened, he spent a whole day with Volkswagen CEO Obo Mu and Volkswagen China CEO Birgit Behrendt, test-driving competitor cars.
In the fierce domestic market competition, Jia Jianxu emphasizes the importance of "communicating and exchanging ideas tirelessly" to revitalize SAIC Volkswagen.
Jia Jianxu, General Manager of SAIC Volkswagen Automotive Co., Ltd.
Since taking office as the General Manager of SAIC Volkswagen last February, Jia Jianxu, along with Yu Jingmin, Deputy General Manager of Sales and Marketing at SAIC Volkswagen, has implemented numerous swift and decisive measures. While stepping up in times of crisis may not be easy, the real challenge lies in delivering results. Facing a decisive moment, how will SAIC Volkswagen chart its course for the next three years?
Yu Jingmin, Deputy General Manager of Sales and Marketing at SAIC Volkswagen
Recently, at a communication meeting between SAIC Volkswagen and the media, Jia Jianxu provided an answer: to achieve mutual beauty and progress by leveraging strengths.
01 Reflect first, then look inward
This year marks the 40th anniversary of SAIC Volkswagen, yet Jia Jianxu has been reflecting all along. In his view, the prominent issue for SAIC Volkswagen last year was "slowness" - slow processes, slow responses, and slow iterations.
In fact, these are common problems for traditional joint venture car companies. In the era of fossil fuels, all processes have been tested over time, where "slow" work leads to fine results. However, with decision-making power in the hands of the foreign party, achieving disruptive changes in a short period is quite challenging.
Jia Jianxu wanted to give it a try. After test driving a series of popular models like Xiaomi and Huawei, he presented three opinions to Obomu and Berryde that needed to be "changed quickly":
The masses are the reason for existence, so the focus should not be solely on individual bicycle profit margins.
When designing vehicles, there needs to be a shift in mindset from traditional engineering and hardware to focusing on electronic and electrical architecture as well as software.
Regarding software, it should rely on iteration and over-the-air updates; there is no one-size-fits-all solution. The old development approach and mindset need to be overturned.
At the same time, Jia Jianxu proposed a solution to lead the technological revolution at SAIC Volkswagen, accelerating the development of PHEV and EREV (extended-range and hybrid) products, then opening up to external partners to fill in the gaps and expand global influence.
First, test drive to experience the speed of China; then speak frankly that if Volkswagen doesn't catch up with the speed of China soon, it will fall behind; finally, present a mutually satisfactory solution.
Jia Jianxu's strategy was very effective. The sincerity of SAIC Volkswagen and Jia Jianxu's efforts moved and gained support from the Germans. There were even colleagues from external partners who quietly asked Jia Jianxu, "If we work together on PHEV and EREV and succeed, can this platform be used by Volkswagen in Germany?"
Without hesitation, Jia Jianxu gave a positive response: "Fully open, the more people use it, the better. Costs can be reduced the more it is used. Everything I do today is to help the Volkswagen brand."
Securing comprehensive support is just the first step. Even as a local company, the challenges of transformation still come from strong competitors. Local car companies with a background in IoT have a strong advantage in software, which many joint ventures see as a "great divide."
Jia Jianxu did not have such a negative mindset: one must look outward to see others' strengths, but also look inward to find one's own advantages. With 40 years in China, SAIC Volkswagen possesses advantages that new forces lack, such as a well-established manufacturing system, high-quality product capabilities, and years of positive reputation.
"I told our team, not only should we see others' strengths, but also recognize our own beauty. By turning our small beauty into great beauty, we can coexist beautifully with competitors."
Therefore, in terms of intelligence, Jia Jianxu does not insist on innovation but aims to be a fast follower at the fastest pace. However, in terms of products, no one understands the essence of cars better than SAIC Volkswagen. Consumers need more certainty, safety, and reliability, which are crucial for the future of SAIC Volkswagen.
The concept of mutual beauty and harmony is also embodied in Jia Jianxu's approach to relationships with foreign partners. To succeed in the Chinese market, both China and Germany must showcase their best offerings, such as China's hybrid systems and Germany's car designs, merging them to cater to Chinese consumers' tastes. "If German Volkswagen can secure a place in China's electric car market, it can surely win the world," Jia Jianxu remarked.
02 Three Years, Twelve Principles
When he first took office last year, Jia Jianxu outlined a nine-word guideline. This year, those nine words have evolved into twelve: "Advancing in Oil and Electricity, Prioritizing Efficiency, Refreshing the Brand."
Entering the era of electric intelligence, SAIC Volkswagen does not intend to go all-in on electric cars; traditional fuel vehicles will remain a significant part of the future landscape. On one hand, many first-time car buyers in the Chinese market still prefer fuel cars for various reasons, with fuel cars holding over 50% market share in China. On the other hand, as a leader in the era of fuel cars, SAIC Volkswagen's flagship products remain top choices in the market.
"In the future, one-third electric vehicles, one-third hybrid vehicles, and one-third fuel vehicles will definitely be our product lineup," Jia Jianxu stated.
In addition to the PHEV and EREV plans discussed this time, focusing on both fuel and electric cars, Jia Jianxu believes in achieving "intelligence and advancement in both oil and electricity." Specifically, this means enabling fuel cars to also have the capability for intelligent upgrades. The recently unveiled Tiguan L Pro at the Beijing Auto Show is equipped with DJI's in-car solution, featuring intelligent cockpit, intelligent driving, and intelligent driver assistance systems. The upcoming Passat Pro will follow suit.
However, the older models of Passat and Tiguan will continue to be sold, as Jia Jianxu puts it, "New models do not replace the old." New fuel cars are used to "embrace intelligence," while classic models are used to "establish the brand."
Simultaneously, electric cars will continue to advance as before. "Electric cars cannot lag behind. We have a positioning, but losses must be at a certain level. We aim to rank in the top ten," Jia Jianxu stated. "Our strategy this year is not about retreating but advancing. The key to advancing in oil and electricity lies in moving forward."
In the first quarter of this year, SAIC Volkswagen received good news with sales of 265,000 vehicles, an 11.4% year-on-year increase. New energy vehicles reached 28,000 units, a 171.3% year-on-year growth. The ID. family received over 10,000 orders in March, the Passat family sold over 53,000 units in the first quarter, a 74.6% year-on-year increase; the Tiguan family accumulated sales of 37,000 units, a 51.6% year-on-year growth; and the Lavida family accumulated sales of 68,000 units.
Looking back at these three months, Jia Jianxu jokingly said that he and Yu Jingmin are "predicting fortunes" and "placing bets" every day: predicting the market rhythm and betting on channel marketing. They have meetings every week, make adjustments every week, and review every week, all to grasp the market pulse, determine the timing of playing cards, which directly decides the basis and sequence of new car launches.
"We must accurately assess this market, knowing when to play our cards for maximum gain. Because we don't have many cards in hand today, we need to predict the market before making a move, which is crucial for every car manufacturer. Investing a lot, blindly playing may not yield any results or impact, so we are actively planning for the future."
The pace has quickened, and efficiency has improved. The market changes rapidly, requiring a combination of strategies. Although it's tiring, the "Jia-Yu" duo is excited, believing that "the earlier you enter the darkest moment, the easier it is to come out."
The dealer and supplier ecosystem is also within the scope of influence. In December last year, Jia Jianxu held separate meetings with them, familiarizing them in advance with the future strategy to adapt to the frequently updated "betting" approach.
The next three years will be the most challenging for SAIC Volkswagen. The bold reforms aim for one thing: SAIC Volkswagen's success, positive market feedback, and a constantly refreshed brand image.
On March 3rd, the ID.3 second-hand car service went live with a bang, offering a remarkable deal to celebrate its 40th anniversary. The news spread quickly: the top-tier Volkswagen ID.3 was available for repurchase at a whopping 60% discount, with a down payment of just 19,900 yuan and monthly installments of 1,399 yuan for three years.
Why is the second-hand car market so crucial, especially when the usual month-long process was compressed into just a few days this time around?
"Many users believe that getting a good deal equals value for money, but what truly defines value for money? The total cost of ownership," explained Yu Jingmin.
Total cost of ownership refers to the difference between the purchase price and the resale price. The depreciation rate of electric cars significantly influences purchasing decisions, and ongoing price wars have left many brands struggling. Unable to sell at a good price and impacting resale value, car manufacturers face the risk of being overwhelmed by costs alone. While the total price may seem reduced, the total cost of ownership remains unchanged for users.
Therefore, SAIC Volkswagen took the proactive step of shouldering this responsibility. By offering a 60% repurchase value, they redefined the value of ID.3 second-hand cars.
"The entire market needs this kind of approach; otherwise, following others' pace will lead to endless price drops," Yu Jingmin emphasized. "Firstly, we owe it to the users to ensure that the total cost of ownership is reduced. Secondly, we are responsible to the users; the value and pricing of second-hand cars are the responsibility of the original manufacturer, and they should be guaranteed through the marketing of their new car values and the capabilities of their second-hand cars."
At the Beijing Auto Show, SAIC Volkswagen also announced the launch of the ID. Care value retention package in collaboration with insurance companies, expanding the coverage to include the ID.4 X and ID.6 X models.
This move represents another form of differentiated competition for SAIC Volkswagen, directly investing in the future owners three years down the line.
For instance, if a young person buys an ID.3 in 2024, and three years later, with his wallet full and a plethora of new SAIC Volkswagen cars available, he can benefit from the official second-hand car policy offering a 60% repurchase value. What are the chances he would opt for repurchase?
As Ji Jianxu pointed out, "This repurchase strategy is already in operation for our customers. Why repurchase after three years? Three years later, SAIC Audi will introduce many new models. You can move up the ladder, switch to PHEV, EREV, or whatever you prefer. Three years later will be our peak year, and users can freely choose our products."
The ability to implement such policies is undoubtedly supported by the massive scale of SAIC Volkswagen and their corporate responsibility. "Next, the car manufacturers will have the obligation to recycle batteries. In a way, we have already taken the first step," Ji Jianxu added.
With 27 million users, Ji Jianxu is determined to carve out a unique path in the price war, ensuring that users have zero anxiety about the value retention repurchase. Internally, SAIC Volkswagen is also exploring cost reduction solutions through technological advancements. "Price reductions resulting from technological iterations are the real protection for consumers," Ji Jianxu concluded.
04 Leveraging Strengths for a Brighter Future
As SAIC Volkswagen celebrates its 40th anniversary in China, the relationship between the two parties goes beyond mere "joint venture" to one of mutual benefit and achievement.
In the era of electrification, the "in China, for China" strategy becomes increasingly crucial. How can the company swiftly transform and maintain its competitive edge?
Embracing a new era of reciprocal learning in joint ventures, Jia Jianxu emphasizes the importance of leveraging strengths. "Utilize the strengths of the Germans for my use, and also harness the strengths of the Chinese. The key is to think creatively, identify weaknesses, and know where to find strengths to compensate for those weaknesses."
Jia Jianxu believes that the human factor plays a significant role in this process. "From school to the factory floor," he trusts that every SAIC Volkswagen employee, like himself, will diligently fulfill their mission with dedication and emotion.
"If we do everything we can to guide SAIC Volkswagen through its toughest times, what will be the outcome? This is the value of living one's life," Jia Jianxu remarks. "With clear division of labor and diligent work, I will be here in 2024 and 2025, and I will be even better in 2026 and 2027."
