0321internalchassis

Interview Notes Interview Date:Feb. 23, 2000Interviewee Name:Mr. Meng XianghuiInterviewee Position: Chassis Sales Department ManagerCompany and Address:FAW Sales CompanyYing Chun Rd. Lu Yuan,Changchun, 130011Interviewer Name: Bill He, Jane XuBackground Mr. Meng just took over the Chassis Department and is not crystal clear about chassis business, more, he is pretty busy in this sales peak season. Mr. Meng acted as the manager of Truck Sales Department before 1998 ,1999 chassis and OEM sales under “Medium and Heavy Truck” title1998 Sales Volume1999 Sales VolumeIncrease/decreaseChassis22,86538,18067%OEM39,84332,147-20% Chassis sales volumes sharp growth in 1999 is due to:3160 (9 ton double-bridge) chassis sales right was transferred from “Zhong Xing Che Chang” to FAW Sales Company in 1999this has directly result in all the 67% chassis sales volume increase in 1999 OEM sales volume decrease in 1999 is due to :2 Ton King (a 4 Ton truck in disguise) was sold under the “Medium and Heavy Truck” Sales title in 1998, in 1999, it was sold under “Light Truck” Basically, there is no big gap in sales volume between chassis and OEM trucks-both count for 50% of the total sales, but with the development of logistics business, chassis fit for different usage (self-dumping, gas, oil, etc.)is likely to have a more bright futureChannel FAW mainly sold chassis to 1. Refitting Factory In 1999, FAW sold 5,000 chassis to 92 refitting factories all around China. Only few among the 92 has large scale. Almost all the truck refitting factories not only have business relationship with FAW but also with SAW and other FAW competitors Usually, the refitting factory has its own sales network, e.g. Oil companies, etc. It directly sells the refitted chassis through its own network2. Dealers3. Key client According to the Chassis/OEM sales chart provided by Truck Sales Management Dept, FAW sold around 2,200 chassis to its key clients such as Chinese Military in 1999Profitability To Refitting factories, average profit rate per chassis (refitting + sales + rebate) is around RMB 4,000 Mr. Meng is not clear about the profit rate of dealers who do refitting business Average price gap between FAW chassis and FAW OEM is around RMB 20,000Key Issues The OEM FAW provided now is only the chassis equipped with standard case The standard cases were produced by the FAW Case Factory. With less and less market demand for standard case, the Case Factory is at the edge of bankruptcy. According to Mr. Meng, the Case Factory is currently under reform, it might be managed by Si Huan in the future Mr. Meng think the chassis sales should rely on the refitting factories over the country, its unnecessary for FAW to collect all the refitting business under its own because of: Refitted truck made by FAW will sold at an in-competitive price since it needs to bear the extra financial burden of whole FAW Local refitting factory could provide more flexible service to fit for the local demand Some refitting factory has its own sales network and FAW should fully utilize it. Mr. Meng will mainly work on the refitting factory side this year as to raise the overall chassis sales volume