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Strength vs Weakness for Internet Companies as Automotive Startups

by Kevin Li | 3月 09, 2016

2015 was an extraordinary year in China’s auto industry as many Internet companies and startups rushed in, bringing numerous surprises. Examples include COWIN AUTO, LeEco/Letv, NextEV, Skio, Xiaopeng Motors and ZhicheAuto.

By further investigating these companies' details, some strength and weakness in common are very interesting to be shared.

1. Strength

Precise targeted customer
: most of the cars  are entry level or mid-ranged, targeted customers are younger people in big cities with detailed age range and work experience, some of the cars are high end aiming at Tesla as their benchmark and some of the cars are designed for ride sharing/car sharing purpose.

Internet thinking: embedded in design, product style and HMI, adopted in hardware and software development, benefit product design and upgrade via data collected from always connected cars. Moreover, Internet company's culture in organization, operations and employees career plans can bring extra benefits in company's efficiency and productivity, talent acquirement etc.

Open cooperative altitude: ppen cooperation in  technology development,  investment, manufacturing, marketing and sales, some of the Internet companies announced to open ecosystem to their partners, but before that, they normally have fully control on some core capabilities in the ecosystem.

Crowdsourcing: adopted in  brand naming, customer requirement acquisition, product design, product features define, HMI, sales, and aftersales. Internet companies normally launch their crowdsourcing campaingn via interest group, online or offline seminars , car making partners are typical methods.

Fast product iteration: before product delivery, fast iteration in product R&D and production;after delivery, via OTA updates to continue product iteration, also get customers involved in iteration process.

Word-of-mouth marketing: often adopted together with online sales and accurately targeted customers, as a replacement of traditional advertisement channel (flat media, TV etc.).

2. Weakness

Trial-and-error is a typical method adopted by Internet companies in their product development process, yet it isn't suitable for automotive product development and OEMs has very low tolerance to neglect errors for time to market reduction purpose.

Weak influence for Internet companies on traditional automotive supply chain.

Potential weakness in mass production due to Internet companies' inexperienced skills in supplier management, marketing & sales and CRM.

Aftersales support: Internet companies normally rely on 3rd party support can reduce cost but that may cause service quality assurance problems and also miss opportunity in up-selling during the car usage.

At last but not at least, Internet companies are easier to recruit talents from traditional automotive industry, but they may also have a relative high churn rate in the mid- and long term.

For more details of their objectives, respective visions, key products, core capabilities, partners, and a SWOT analysis, please refer to the report- China’s Rising Automotive Startups that pulished by AIT service of Strategy Analytic in March 2016 .

 

 

 

 


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