Pang qinghua:dealer harmonious relationship

Editor’s note: the Contract for Automobile Brand Dealers Authorization raises concerns about benefits of automakers, dealers and consumers, which have some imparity terms in favor of automakers have been criticized for violating the dealer’s rights and interests. The draft of Automobile Brand Dealers Authorization, drawn up by the State Administration of Industry and Commerce and the Ministry of Commerce, together with China Automobile Dealers Assosiation, has been called off this July, as a result of automaker’s strong resistance.

Soon the contract of 2010 will be signed, some issues have already attracted widespread concern: whether those imparity terms in favor of automakers will come to an end, or if the dealer’s interests will be protected or not. On behalf of automobile dealers, Pang qinghua, the chairman and general manager of Power Diversity Automobile Trade Co.Ltd, accepted an exclusive interview from Sohu Auto.

As to imparity terms, foreign brand automakers follow suit, the risk exists

Auto Sohu: Are there any imparity terms in the authorization contract between automakers and brand dealers? If so, did your company also consider them as tactic agreements?

Pang qinghua: Nowdays production and sales contract led by manufacturing enterprises are widely implemented in China, which are not quite fair and include some imparity terms. Firstly, the dealer’s authorization contract is usually valid for only 1 year in China, while it takes several years for an automobile outlet to get established, not to mention that the land lease is usually for 10 to 20 years. As required to do so, it’s obvious for those dealers to suffer great loss, if the contract is expired in 1year. Thus, under the control of the automakers, they have no other options but to follow it.

Secondly, manufacturing enterprises have asked for sales volume after the contract has been signed. As suppliers, automakers usually don’t deliver goods by demand, but based on their production: for example, if dealers are unable to fulfill the sales volume desired, those automakers will only deliver the vehicle with 2.0 litre, even they know the vehicle with 1.6 litre is big seller in the market.

These situations are not only common in China, but also some foreign automakers have begun to follow suit, which had bad impact on automobile industry. However, as dealers, we have to make a concession to them.

Two factors covered up the conflicts between automakers and dealers

Auto Sohu: Since the imparity terms have been for a long time, why dealers didn’t boycott them, but continuously carried them out?

Pang qinghua: I don’t think there are major conflicts for two factors. On one hand is the rising land price. It may increase from 500,000 yuan per acre to 1million yuan per acre now. Even if many dealers transfer their outlet, they will not suffer any loss with the advantage of land price growth. On the other, the automobile market is growing at fast speed. With the great demand for automobile market in China, manufacturing enterprises have strong desire for expansion, as well as its great hit to reconstruct the old outlets. Hence, there is nothing left.

Auto Sohu: Whether those imparity terms make dealers suffer any loss?

Pang qinghua: These situations don’t fit in with modern enterprises. Modern enterprises make plans and raise expectations to the question that in how many years the land price will be recovered. Thus, only 1 year of contract cannot fulfill this task. It is also risky for investors that operation term is just 1 year, when the enterprise is listed. In addition, dealers, even banks can’t make use of the brand authorization for pledged assets, since it’s just 1 year, but only use hadrware assets instead.

Harmonious relationship will be achieved after the auto market is saturated

Auto Sohu: Whether the relationship between automakers and dealers will be improved, and what is the precondition?

Pang qinghua: Dealers are dying to change these unfair practices, while automakers are dominating in this situation. The mission of our association is to unite dealers, fight for our right to speak. Moreover, our aim is not to threaten enterprises, but to seize fairness. As the largest automobile sales market, we have drawn great attention from abroad and it is essential to develop and rationalize the relationship between automakers and dealers.

It’s possibile to improve their relationship, and people will understand it gradually. The market will not be always in this gratifying situation, once it is satuated, the relationship between automakers and dealers will get harmonious. (SERENA)

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