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Talking about the epidemic: planning for the worst

: There are some rumors about big search cars on the anonymous community of social platforms, such as big layoffs. Is this true?

Yao Junhong: The rumors on the Internet are very headline. Compared with the facts, the exaggeration is more powerful. In fact, many of the plans at the end of last year did not take into account the impact of the epidemic. We made some new judgments during the Spring Festival, and executives have been meeting to discuss how to adjust. The conclusion is that this year we need to focus more on the coreWe need to strengthen the business and the business with good cash flow, while those that are more future-oriented or do not see cash flow in the short term, we have to weaken it. Overall (personnel) has been reduced by a proportion of about 13% or 14%. Of course, the proportion of some local departments may be slightly higher, but the staff of some departments is still increasing, which is a normal adjustment to respond to changes in the external environment.

: Will this adjustment continue for a while?

Yao Junhong: Actually, whether the epidemic is within three months, six months, nine months, or eighteen months (end), I tend to use the worst results to look at the problem from the perspective of the company. We It is still assumed that it will have a sustained impact within six months, to see the changes that may occur in this industry and what we should do. .

: What do you think of the impact of this epidemic on the entire new and used car trading industry?

Yao Junhong: The automotive industry is quite different from SARS in 2003. During SARS, the total number of cars in the country should be tens of millions (Note: The total number of cars in the country in 2003 was more than 20 million). A large number of families have no cars yet. As a result of SARS, everyone has some public fears (fear) Therefore, after the epidemic ended, it actually promoted the sales of cars. But today the market environment is completely different. Now the annual growth is 20-30 million vehicles. The number of families in first- and second-tier cities is already very high. In turn, the number of families in third-, fourth-, and fifth-tier cities is still relatively low. Less than 30%, which is the result of my own estimation and communication with experts.

We judge on the general trend that the first- and second-tier cities in the new car market will decline. Under the epidemic situation and everyone’s judgment on future income, the probability of choosing a car will decrease at this time, especially some cars in good condition. . I think this should be a big trend. However, the market demand in the third, fourth, and fifth tier cities will be partially stimulated. In the end, the overall growth of the industry will decline or remain flat. The final figures have their own judgments. My judgment is that the first and second tier cities have fallen and the third and fourth tier cities have risen, but the overall proportion Growth will also be relatively limited and not much.

For used cars, our judgment is that overall demand will decline because the desire to eliminate used cars is reduced. In this market, there are products that can be sold, and good car sources are scarce, but under the influence of the epidemic, there will not be such a large trading volume.

: But will many people who had no cars want to buy cars after this epidemic?

Yao Junhong: I think this applies only to people who do n’t have a car. For example, I want to become a person who drives more and uses less public transportation. But the problem is that there are very few families without cars in first and second tier cities. Under this premise,How does it grow? A few people couldn’t afford a car because of the original economic situation. He suppressed this consumption and gave priority to buying a house to improve other family conditions. In fact, the number of these people in first- and second-tier cities is still very small. Instead, the need to replace those who already own a car is suppressed, and they want to change cars later.

Talking about business: reducing investment in second-hand cars, focusing on onlineness

: In light of these trends, what adjustments will you make in your business?

Yao Junhong: From the perspective of our business, we may reduce (invest) in the second-hand car end, because it is judged that it may not have such a large transaction volume in the short term. In fact, when we planned last year, it was still increasing, because CheePai has almost doubled its business volume since our merger and acquisition. This year, we wanted to double it from last year, but under the changing situation, we will definitely Make appropriate adjustments and cuts.

In addition, the layout of the trading end in the first-tier and second-tier cities will be weaker, because the amount generated on this end will be less. Fortunately, the auto industry was sinking last year. We have been To strengthen the layout in the third, fourth, and fifth-tier cities, the system must be strengthened, it must sink to a lower level, and also contribute to the industry. It is also a good opportunity for us to generate revenue.

: Will there be any changes in the sales model?

Yao Junhong: Yes. The epidemic has greatly affected the original business model of the offline retail system. Customers cannot go to the store and sales cannot meet. Therefore, we are also studying how to digitize and online the automotive industry, because the entire industry’s demand for digitalization will grow very rapidly, and the demand for online customers and transactions is very urgent. Dashou ’s mission is “Promoting Digital Civilization in the Automotive Industry”. How to play the role of a manufacturer in the event of an industry crisis, we have invested more resources to further deepen the digital system of the entire industry, including assisting and promoting the entire industry online The change in the way of doing business is a window period for us, and it is also a process to solve the pain points of this industry.

We started promoting live and short videos last year. By the end of the year, we were already helping about 30 brands and manufacturers to go online, including pulling all of their 4S stores to do live and short videos together. This year we will have more layouts on this piece.

: Including many car companies and used car platforms, they are trying to go online. What is the difficulty in this part?

Yao Junhong: First of all, we must analyze why the process of onlineization of the automotive industry is so slow. The commercialization of consumer goods such as electrical appliances and clothing is very high, but cars have not yet reached it.

: Because cars are expensive, do people still feel more secure about offline transactions?

Yao Junhong: This is itsOne reason. The car transaction needs to be explained. People do not know it as well as air-conditioning TVs. The difference between low and high distribution is relatively small, and they generally know how to use it when they buy it. In the era when there are no live short videos, articles and forums like the car home everyone like to watch.

But a good direction is that live broadcasts and short videos bring new opportunities to reach users and explain products to all car sellers and producers. One scene is that before the Spring Festival, we did a round of live broadcast for FAW Mazda, 1.73 million people came, and directly reached the target customer group of 1.73 million. This is not the same as the offline 4S store, receiving 173 People, they need a lot of time to talk about products. This is something we also could not think of. The original estimate of one million is good, and the result exceeded expectations.

: So it is also considered that the automotive industry has brought new development opportunities.

Yao Junhong: Originally explained that a product depends on a heavy offline showroom. Now in live broadcast mode, I will show you my factory, see how the car is produced, and find industry experts to comment on various parts of the car. The situation is much clearer than the general sales explanation of 4S stores, which brings new opportunities. I think the development of live broadcast and short video will bring a great boost to the overall onlineization of the automotive industry. Therefore, we started the layout in the middle of last year. By the end of the year, I think we have run through and some customers are basically mature. . Of course, the popularity is very low. Last year, he tried more trendy manufacturers. His understanding of this business and trying new things are more active. This year ’s epidemic may drive more manufacturers. Those who did n’t pay attention to them started to pay attention. To reach users more widely in this way.

I have an optimistic idea. Maybe after the epidemic, the entire Chinese auto manufacturers have taken the lead in digitalization and onlineization. Good companies are all refined. You have n’t experienced it, so you do n’t try it, and you have no chance to evolve, but because of some external circumstances, the industry is forced to apply these new methods more actively, and then compete globally. Has improved.

Talk about advice: Pay close attention to cash flow, “the decision to be made is still to be done”

: What is Dousou’s current cash reserves? As you say, support for at least 6 months.

Yao Junhong: I have been in business for 23 years, it is a long time and I have experienced a lot. I was a group of people who were defeated by SARS. When the epidemic was worst in 2003, I was in the air ticket business, the industry was hit hard, and I did not make corresponding adjustments, so I can only change the industry after the SARS. For companies, everything else is not important. All companies have only one way to die is cash flow.As long as the cash flow is constant you will never die.

For companies like Dasouche, I have to figure it out. In any case, we must reserve a cash flow reserve of more than 12 months. Unless your monthly cash flow is all positive, you can consider a little shorter, reserve for three months, and invest more than three months to invest in opening new stores to expand. However, this situation is afraid of encountering natural disasters. Once encountered, if you can carry it, you will continue to open new stores to recruit new people.

It is relatively easy to achieve profit from our perspective. Our company was profitable last year, and the situation is not bad.

: So do you think it’s relatively easy to get through this crisis in the next big search?

Yao Junhong: At the end of last year, all the planning was based on a plan to maintain at least two months of cash flow, but today an epidemic came out suddenly, my income end will be affected, and the cash flow will be recalculated. In the worst case, 12-month growth is guaranteed.

When cash flow is tight, the company will lay off employees at the end of the year, because relatively speaking, the loss at the end of the year is the lowest, and the reason is the best. We saw some companies’ layoffs in response to the epidemic. Generally, he did not lay off staff at the end of the year, but took some actions in response to the epidemic. Generally, his cash flow would not be a big problem, because he would make the decision at the end of the year. The companies that have emerged to be scaled back are all directly affected by the epidemic. Of course, the impact of the epidemic on different companies and industries is different. For example, Xibei, from my perspective, I understand very well (their approach) that the door of the catering industry cannot be opened. What can I do?

So entrepreneurs must pay close attention to good cash flow. Today we can be better to our employees, and everyone will hold together. We let a group of people get a sum of cash, give him a new choice, and make it safer for another group to spend the winter.

: Has Dasouche planned to go public in the past year or two? Will the epidemic affect this?

Yao Junhong: I think it is necessary to understand clearly the purpose of listing and at what stage it is appropriate to go public. We divide enterprises into two tables. One is on-balance sheet assets and the other is off-balance sheet assets. Off-balance sheet assets are actually something invisible. When off-balance sheet assets have not appeared on the secondary market, they are more suitable for the primary market.

For example, I have five types of revenue, corresponding to five business directions, and have shown five growth curves in the financial statements. At this time, they can be listed at any time. However, if only five business curves are shown on the table, the primary market investors have the patience to listen to you clearly the future of the five lines, and can also give you a five-line discountprice. People in the secondary market also listen to your five lines. I first need to look at your report, and then you make a forecast every quarter. After the forecast is completed, you will tell him that he did not do it, and then give you a price. Therefore, the secondary market focuses on looking at on-balance sheet assets and assisting in looking at off-balance sheet assets.

I think an enterprise should go public when the mainline business in the strategic plan has presented the assets on the table. For Dasouche, our first layer of structure is industrial digitalization, and the revenue is the benefit of SaaS. The second layer of structure is to help the entire industry build a digital supply chain. I have five supply chains, and the five supply chains have not been reported When generating on-balance sheet assets, it is not appropriate for me to start listing too soon. The third is intelligent data services. The layout has started since the beginning of last year, but that revenue is usually slow because it is based on the aggregation of data to generate cash. We will definitely not wait for the third line. I must at least ensure that my first-tier structure and second-tier structure can see clear strategic results both inside and outside the table, and then we will go up.

: As a person who has been in business for more than 20 years, what advice do you have for other entrepreneurs?

Yao Junhong: First of all, look at the cash flow, at least the cash flow that can have a living space of 12 months in the worst case; secondly, at this time, we must definitely think deeply and analyze the epidemic situation. Changes and impacts that this link may bring. The external environment is changing, and everyone’s conclusions are different. In case of making a wrong judgment, the decision is also wrong, so the chance of facing risks is very large. Take 2003 as an example, you think that a decision will be made when it is growing, but we will subdivide it again and analyze the front-line and second-line, consumer mentality, and actual car ownership of consumers.

It’s like I took my team to analyze the perspectives and mentality of the three systems of the manufacturer, the 4S store group and the 4S store single store. The single group of the Automobile Group is considering the short-to-medium-term survival issue today. Manufacturers are considering not only short-term but also medium- and long-term issues. Manufacturers have both a mid-to-long-term perspective as well as the ability and willingness to pay. Dealer groups and single stores today do not have the willingness to pay and may not necessarily have the ability to pay. At this time, the main direction of our business is also digitalization. It is more reasonable for manufacturers to pay for the digitalization of 4S stores, rather than 4S stores paying for digitalization.

Third, we must resolutely make our own adjustments and decisions. When you have a clear understanding of the possible impact of various links in this industry, look inward to see if your business structure, planning and organization are in line with today’s changes in the new market environment. You must resolutely adjust after the plan is wrong.