Innovation Workshop Chairman Kai-Fu Lee previously put forward a perspective: the United States is more inclined to basic technical innovation in the field of the Internet, while China is better at optimizing user experience in application innovation. As we all know, all the reforms and new planning promoted by global auto giants in the past two years are basically centered on the topic of auto + Internet. As a result, the automotive industry is also experiencing similar phenomena.
Chinese new car companies have proposed many new ideas in terms of service and model innovation. However, today we are not talking about new car manufacturing, but a solution called “BAIC Leasing” in the field of automotive sales launched by BAIC New Energy. So the question is, what new ideas can be made in selling cars? Just various financial solutions?
First, let’s talk about the traditional process of buying a car.
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First, you need to bring various documents for car purchase to the 4S store to complete the information verification and sign the car purchase contract.
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Second, pay the down payment (or full payment). The 4S store will give you the car key, and there are also invoices, certificates of conformity, three-guarantee manuals, and usage manuals, etc. attached to the key.
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Third, buy insurance (compulsory traffic insurance, commercial insurance, pay car and boat tax).
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Fourth, apply for a temporary license plate, and then apply for a formal license plate within the next month (the temporary license plate will expire after a month).
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Then, pay the vehicle purchase tax (note that various documents such as invoices and certificates of conformity mentioned earlier need to be brought), and keep the tax payment certificate obtained. Bring all relevant materials about car purchase for safety when going to the vehicle management office to get the license plate. Bring the original compulsory traffic insurance and the vehicle purchase tax payment certificate as well.
Well, that’s almost it.
What problem does BAIC Leasing solve?
With BAIC Leasing, first you can pick up your car with zero down payment. However, this is not the most important thing. The key is simplification of the process.
How simple is the entire process? Bring your ID card and order at the leasing and sales all-in-one machine at BAIC New Energy’s 4S store. If nothing goes wrong, the online verification can be completed in three minutes, and you can drive away immediately after paying the first payment.
That’s it.
What’s more, there’s no worrying about purchasing contracts, data verification, insurance or registration. Let’s talk about the specific plan below. You can buy it outright, or pay in installments over three years, or give up the vehicle ownership after three years.
The model is the BAIC New Energy EC220. Note that if you buy it outright, there will be no down payment. However, compared with the normal payment for buying a car, you can still save more than a month’s worth of buying a car, dealing with various procedures, registration and insurance fees.
Lease Plan A works like this: pay a deposit (refundable), then pay monthly rent of RMB 2150/2200 for the next three years. After the three-year contract is over, the car owner can choose to transfer the vehicle or give up the vehicle ownership. If the vehicle ownership is surrendered and the car is not wanted, a refund of up to RMB 18,000 can be obtained.
For plan B, the monthly payment is reduced to RMB 1850/1900, with the main difference being that after the three-year contract is up, you can choose to return the car or pay RMB 15,000 in one lump sum.
Regardless of Plan A or B, all the aforementioned procedures, including registration, insurance (mandatory and commercial), and the first year’s maintenance costs, are all paid by BAIC New Energy, amounting to over RMB 10,000.
The core logic of BAIC Rent-Sale is to simplify the car purchase process and reduce the threshold for car purchases. All Rent-Sale models are pre-registered and all procedures are completed in advance.
In addition, during the three-year contract period, mandatory insurance, commercial insurance, and maintenance (once per year) are all free. If the car owner chooses to buyout after the three-year contract is up, there will be another three years of free extended warranty coverage. In other words, all of the costs related to the car usage will be eliminated within 6 years or 120,000 kilometers.
Additionally, BAIC New Energy provides third-party liability insurance worth RMB 300,000 and automobile damage insurance worth RMB 50,000. If you are not satisfied with this plan, you can expand it according to your wishes, which is very flexible, but you will need to bear the extra cost yourself.The model of Beiqi Zuche reminds me of the subscription payment model for software. After the release of Microsoft Windows 10 operating system, the official Microsoft blog once wrote: “Windows 10 will be the last generation of operating systems, and the future operating systems will exist in the form of services.“
In other words, the copyright fees for genuine Microsoft operating systems will change from a one-time purchase to a monthly subscription payment. Although the system has not yet been implemented, the Office series of office software has long been changed to a monthly subscription payment model represented by Office 365.
The logic behind it is actually the prevalent strategy on the Internet. Real business for operational users is never a one-time deal.
A one-time deal has many problems, which means that the user experience threshold is high, and it means that there is no relationship with the user. However, we all know that the automotive industry is becoming more and more user and operation-oriented, from the R&D-manufacturing-sales business model to the development direction that values users and operation.
From this perspective, Beiqi Zuche’s exploration is quite interesting. But I have a suggestion, can they expand the range of vehicle models and enrich the choices? Or should other car companies follow suit?
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.