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NIO brand no longer adheres to the direct sales model and is considering establishing a dealer network in the European market

王俊杰2017
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On October 18th, according to Reuters, three insiders revealed that NIO Motors is considering establishing a dealer network in the European market to boost sales. After the delivery situation in Europe fell short of expectations last month, NIO has started evaluating its distributors in major European markets.
The source stated that the channel adjustment mainly involves NIO's ongoing Firefly project. The latter is a sub brand of NIO positioned in the price range of 100000 to 200000 yuan, first targeting the European market and expected to debut in the third quarter of next year. According to insiders, NIO has discovered the uniqueness of the European market, which may be one of the reasons why the company has adjusted its sales channels for fireflies.
In response to the above news, NIO issued a statement stating that the brand's marketing and sales model in Europe has not changed and is still committed to establishing a direct sales network. However, the sub brand "Firefly" is evaluating the channel model in Europe, including direct sales, agents, or distributors.
Since entering Norway in 2021, NIO has been adopting the same direct sales model in the European market as in China, that is, selling and providing services through self built exhibition halls and online platforms. Although this model can provide users with better services, it also faces the pressure of high capital investment.
Last October, NIO entered Germany, the Netherlands, Sweden, and Denmark again, expanding into the European market. NIO did not adopt a direct sales strategy for cars, but instead used a "subscription model" service similar to leasing. Founder Li Bin once explained that this strategy is based on the mature local business model and tax system.
Previously, it was rumored that NIO had only sold 832 vehicles in the European market for six months. NIO President Qin Lihong dismissed the rumor as inaccurate, and the actual operating results were approximately three to four times this number. However, Qin Lihong expressed dissatisfaction with the current situation, as overseas sales did not meet the company's expectations.
At present, NIO is still facing sales and financial pressure in the domestic market, which may be another reason why the company is trying to quickly open up the situation by introducing distributors in the European market.
After the delivery volume exceeded 20000 for the first time in July this year, NIO's monthly delivery volume fell for two consecutive months. With sales under pressure, NIO, which is still accelerating the construction of infrastructure, is also facing significant financial pressure. As of June 30, 2023, NIO's cash reserves amounted to 31.5 billion yuan, a decrease of 6.3 billion yuan compared to the previous quarter.
Given that the EU's anti subsidy investigation into Chinese electric vehicles is still ongoing, the development prospects of domestic automakers in Europe remain uncertain. Previously, Li Bin, Chairman of NIO Automotive, called for all governments to adopt an open attitude rather than isolationism.
In recent years, Europe has become a key area for Chinese new energy vehicle companies to seek breakthroughs. At the beginning of the year, Xiaopeng Motors announced the opening of delivery and service centers in Norway, the Netherlands, Sweden, and Denmark. At the Shanghai Auto Show, Geely Krypton announced that Geely Krypton 001 and Geely Krypton X became the first models to enter the European market.
Xiaopeng Motors has announced the introduction of a distributor model in Europe. In September this year, Markus Schrick, the German head of the brand, stated that Xiaopeng plans to sell in Germany through traditional distributor methods and is in talks with several larger chain stores. Although the current direct sales model is still dominant in Europe, Geely Krypton has also signed agreements to establish an automobile distribution network in Israel and Kazakhstan.
By collaborating with dealerships, car companies can leverage their mature distribution channels established locally to expand their business in a more cost-effective and efficient manner, as well as better perceive local consumer preferences and adapt to local regulations and policies.
BYD's recent achievements in the Southeast Asian market have demonstrated the prospects of this model, as early collaborations with large local conglomerates have allowed BYD to continue expanding its business footprint in Southeast Asia. Currently, it has defeated competitors such as Tesla and occupies over a quarter of the electric vehicle sales share in the region.
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