The diversified path of automobile exports: a full analysis of four models
In the context of globalization, automobile export has become a key initiative for China’s automobile industry to expand the international market and enhance international competitiveness.
Today, we will deeply analyze the four main modes of automobile exports, and look at their respective characteristics and advantages, as well as the layout of the global market.
I. Parallel export: a flexible path for “new cars-to-be” to go to sea
(i) Definition of modalities
Parallel export refers to the purchase of a new car from the domestic market by a national car trader without authorization from the brand manufacturer, and the subsequent sale of the new car in a similar condition as a “new car-to-be” in the name of a used car in an overseas market.
(ii) Operational processes
The trader first purchases the car in China and completes the settlement procedures, then transfers the vehicle in the form of a used car to a company qualified for import and export business.After that, they apply for an import and export license from the Bureau of Commerce, complete a series of procedures such as customs clearance, inspection and filing, and finally send the vehicles to overseas countries.
(iii) Unique advantages
The channel cost of this model is lower and there is no need to pay extra fees to official dealers, so it has a certain degree of competitiveness in terms of price.With flexible operation and a wide range of export models, FTC is able to meet the diversified needs of overseas markets.
(iv) Market distribution
The main markets for parallel exports are concentrated in countries such as Kyrgyzstan, Russia, Uzbekistan and the UAE.Of these, Kyrgyzstan, Russia and Uzbekistan account for a relatively large share of the market, with a combined total of more than 50 percent.The UAE is often used as a transit point from which vehicles are sold to parts of Africa and the Middle East.
Second, used car exports: cost-effective choice to help the global market
(i) Definition of modalities
Used car export, as the name suggests, is the process of exporting used cars, which have been used in the country, to other countries.These used cars need to go through the process of evaluation, inspection, and preparation in order to meet the corresponding requirements of the target market.
(ii) Operational processes
Firstly, detailed assessment and inspection of the used vehicles are carried out to understand the actual condition and market value of the vehicles.Then, according to the demand of the target market, necessary preparation work is carried out on the vehicle, such as replacement of parts and components, maintenance, etc., to ensure that the vehicle meets the export quality standards.Next, go through the export formalities such as customs declaration, inspection, application for export license, etc., and finally ship the vehicle to the target country through the appropriate mode of transportation.
(iii) Unique advantages
The model can make full use of the abundant domestic used car resources to meet the demand for low-end, cost-effective vehicles in some overseas markets.For economically underdeveloped regions or markets that are more sensitive to automobile prices, the export of used cars has a larger market space, and it also promotes the benign development of the domestic used-car market and the replacement of vehicles.
(iv) Market distribution
Used car exports are mainly oriented to some countries in Africa, Southeast Asia and Central Asia.In these markets, the demand is mainly for affordable vehicles, and used cars show strong competitiveness by virtue of their price advantage.Specifically, demand for affordable vehicles is more evident in the African market, while used vehicles from Southeast Asia and Central Asia also have a certain market share due to their price attractiveness.
III. Conversion plant exports: personalization to meet special needs
(i) Definition of modalities
Modification factory export refers to the professional modification of vehicles by modification factories according to the specific needs of overseas customers, local regulatory requirements or market characteristics before export.The content of modification includes both the conversion of vehicles into special vehicles, such as residential vehicles, ambulances, fire trucks, etc., as well as the personalized modification of the vehicle’s appearance, interior, performance and other aspects.
(ii) Operational processes
Through market research or communication with customers, the specific tuning program is clarified.Then select eligible vehicles and carry out the modification in accordance with the modification program.In the process of modification, relevant standards and norms are strictly followed to ensure that the vehicles meet the quality requirements in terms of safety and performance.After the modification is completed, the vehicles are inspected for quality and debugged, and after confirming that there is no error, export procedures are carried out and the modified vehicles are transported to overseas markets.
(iii) Unique advantages
Tuning plant exports can meet the special needs of specific overseas markets and enhance the added value and competitiveness of products.Modified cars have unique features that can meet the personalized needs of different customer groups and occupy a distinctive market share in the international market.At the same time, by virtue of the more mature domestic automobile tuning industry resources, can effectively reduce the cost of tuning and improve production efficiency.
(iv) Market distribution
The market coverage of conversion plant exports is wide, depending on the type of conversion and the characteristics of the target customer groups.For example, the modified exports of residential vehicles are mainly concentrated in the field of leisure tourism in Europe and the United States and other developed countries; the modified exports of special vehicles for specific industries need to adjust the market strategy according to the needs of the industry in each country.The Middle East has a greater demand for high-performance fire trucks, while the African region is more inclined to choose sturdy and durable modified engineering vehicles to meet the actual local conditions of use.
IV. KD Parts Export: Parts and Components Going Overseas, Reducing Costs and Increasing Efficiency
(i) Definition of modalities
KD stands for Knock-Down and is available in both semi bulk (SKD – Semiknockdown) and bulk component (CKD – CompleteKnockdown) forms.Automakers disassemble complete vehicles into parts or component assemblies, export them to target countries, and locally assemble these parts into complete vehicles for sale.
(ii) Operational processes
Automobile manufacturers dismantle and sort vehicles in the domestic market and pack them, marking and organizing a list of each part or component assembly.The parts are then safely shipped to the designated country by sea or land transportation.After arriving at the target country, the local assembly plant will accurately assemble the parts into a complete vehicle in accordance with the “assembly manual” and relevant technical support provided.During the assembly process, the quality control standards should be strictly followed to ensure that the completed vehicle meets the corresponding quality requirements.
(iii) Unique advantages
On the one hand, the export of KD parts can reduce import tariffs, because the tariffs on disassembled parts are usually lower than those on the whole vehicle, which can help reduce the price of the products in the target market and enhance competitiveness.On the other hand, the volume and weight of parts and components are more convenient for transportation and packaging compared with the whole vehicle, which can effectively reduce the transportation cost.
To summarize, automobile exporters should choose the appropriate export mode according to their own situation, market demand and product characteristics.Whether it is flexible parallel export, cost-effective used car export, personalized tuning plant export and cost-effective KD parts export, each mode has its unique advantages and applicable scenarios.In today’s increasingly competitive global automobile market, diversified export modes will provide solid support for the internationalization of China’s automobile industry and help China’s automobiles drive to every corner of the world.
Article source: Helping Hand Trading Society
