Editor's note: from December 2 to 8, the reporter followed persons in charge of headquarters of Guangxi Yuchai Machinery Co., Ltd. to visit its clients in northwest areas, with the specific route from Beijing, Shanxi, Shaanxi, to Xinjiang, totaling 10,000km. In Shanxi, three clients were visited, including the Yuchai Service Stations in Taiyuan, Jiexiu, and Linfen. After arriving in Xian, they took a direct flight to Yulin which is a coal production area, and five clients in Shaanxi were visited. Three clients were visited in Xinjiang. They arrived in Hotan of southern Xinjiang after taking a great distance as long as 1,500km from northern Xinjiang. It was a tough journey, but they obtained real, primary, and rare data, and heard the clear voice of the first-line users. How is the public praise and brand influence of Yuchai in northwest areas? Report divided into three parts will be expanded, including Shanxi Part, Shaanxi Part, and Xinjiang Part.

Shaanxi Part: Carry Service through to the End

Throughout the whole domestic engine industry, Yuchai adopts a unique operation mode. At the time when more and more engine enterprises are incorporated into complete machine plants to guarantee their supporting and more and more complete machine plants are seeking self-supply and self-R&D of full set spare parts, Guangxi Yuchai Machinery Co., Ltd. is unexpectedly continuing manufacturing engines without distractions. In the condition that there is no complete machine for Yuchai to rely on and that Yuchai is sandwiched by the peers and complete machine plants, Yuchai stands firmly, of which the secrets and hardships are beyond the description of several words. However, Yuchais operation in terms of service may be somewhat interpreted through contact with distributors and end users in Shaanxi.

Cooperative R&D

The cooperation between Yuchai and Shaanxi Fengshang Automobile Trade Co., Ltd. (hereinafter referred to as Fengshang) which is transformed from a state-owned automobile trade enterprise to a primary dealer of Dongfeng commercial vehicle can be traced back to 1990s. Over 20 years, general manager Zhang Changli has witnessed Yuchais development in Shaanxi.

From 1995 to 2000, Yuchai was in a valley stage in Shaanxi market, but in 2004, Yuchai seized the opportunity and rise sharply in the high growth period of the entire auto industry. The year of 2011 is another peak season for Yuchai in Shaanxi market, reviewed Zhang Changli, which clearly presented the breadth and depth concerning the cooperation of Yuchai with its dealers. In this sense, the relationship between Yuchai and its dealers is far more than a concept of cooperation and win-win situation.

Zhang Changli introduced that in 2010 when Dongfeng Hercules heavy truck started to promote Yuchais YC6M engine in Shaanxi market, the engine was not so popular among users in Shaanxi market. With recommendation of Fengshang, a group of users purchased the Dongfeng Hercules heavy trucks which were equipped with YC6M engine. However, some common problems occurred soon after that, the water tanks being easy to be crashed. During that period of time, Fengshang successively compensated 11 water tanks for users. We have to find some solutions, with such thoughts, Zhang Changli took lead to find out the reasons with the companys maintenance and service stations. They found that the water tank for Dongfeng Hercules heavy truck was at the first designed exclusively for some brand engine, and when the water tank is applied to YC6M engine, its ground clearance shortened, which caused that the water tank was easy to be scratched on uneven roads. Fengshang reported the situations to the finished automobile plant, but was not timely responded; when Fengshang reported the situations to Yuchai, service manager and office director came to solve the problem. Fengshang and Yuchai determined to refit the water tank. Application for expenses on refit would be approved level by level at that time. In order to fight against time, former office director of Yuchai said, just do it, and the expenses will be paid by the office if the worst comes to the worst. After some efforts, the position of fan was adjusted and the water tank was elevated by 11cm, and the water tank was successfully refitted. The refit scheme was submitted to Dongfeng Motor Corporation, fully accepted. After this incident, Yuchais configuration on Dongfeng Hercules uplifted sharply, from blank previously to 70%~80% currently.

Except carrying out mutual improvement with automobile dealers, Yuchai Shaanxi Office also provide sufficient spare parts for them. Since 2009, Yuchai Shaanxi Office has placed engine parts as much as over RMB 200,000 Yuan, with the settlement principle being settlement after sales. Such configuration mode of Yuchai for spare parts is followed by other manufacturers, but as far as my estimation, they are unable to copy our mode, expressed Zhang Changli. He also said, one of the important reasons is that Yuchai people are especially dedicated. When a same operation mode is adopted, other manufacturers always face problems such as safety problem in storage of spare parts, slow update of spare parts, and generation of poor storage. However, spare parts placed by Yuchai in Fengshang are counted by persons sent by Yuchai, with the unsalable ones returned, which has not only relieved pressure of the dealers but also guaranteed the availability for users.

Follow-up Support

In the current Shaanxi market for commercial vehicles, Dongfeng and Yuchai have already become powerful brands. It is the sincere cooperation between Yuchai and its automobile dealers that sparkles their excellent achievement.

Li Guanghua, general manager of Shaanxi Changkai Automobile Sales & Service Co., Ltd. (hereinafter referred to as Changkai) which is the strategic dealer of Dongfeng and key service station of Yuchai, knows well the development of Yuchai. He said that Yuchais achievements should strategically attribute to successful cooperation between Yuchai Headquarters and Dongfeng Headquarters and tactically be ascribed to the excellent implementation of Yuchais local teams to automobile dealers.

Li Guanghua introduced that after Yuchai 6M engine was listed, Yuchai offices didnt directly asked service stations to arrange services but firstly provided services. They analyzed products and markets with service stations. In the meantime, Yuchai provides services without conditions and reasons, and it never takes next steps before solving problems. We simultaneously provide services and maintenance for several spare parts of Dongfeng. Yuchais standardized management, normative settlement, and high integrity always encourage the workers of manufacturers.

When analyzing the service advantages of Yuchai, Zhang Changli included human-based management into them. He told the reporter that as far as some users and nodes which are between compensation and non-compensation, Yuchai always made some human-based treatment, give them some compensation and care, and solve some practical problems for users, in which way Yuchai won more clients and established public praise. He said, at present, products technically tend to homogenization, so effective communication with clients and provision of excellent services determines the market share.

Li Guanghua also deeply understood such point. He said, every time I go to attend meetings in Yuchai Headquarters, current director and former directors always talk with me, which warms me very much. Ordinarily, they are not connected with me in terms of business, but you will hardly feel the superficial relationship in Yuchai. As an enterprise manager, I am also thinking over this point. How could Yuchai made it, and how do they cultivate such work style?

Extending End Users

What is different from peers, especially ordinary suppliers of spare parts is that Yuchai extends the concept of client to three levels, including finished automobile plant, finished automobile dealer, and direct user. Yuchai has paid much for such kind of maintenance and service, but users praise, especially the selecting-and-matching rate, is far reachable for other peers.

Shenmu Longde Mining Limited Liability Company in this year purchased 20 sets of Dongfeng Hercules heavy trucks for one time which were configured with Yuchai engine. Feng Xiang, vehicle team leader of the company said, we investigated 6 brands and finally selected Dongfeng. The reasons include that the trucks dead-weight is relatively suitable for mining area on one hand, and we know well advantages of Dongfeng and Yuchai relying on our years of vehicle-using experience on the other. He Liaobo, repairman for trucks of the vehicle team, said, drivers are impressed by Yuchai engine, and economical fuel efficiency, high power, and low noise are Yuchais advantages superior to other brands. Feng Xiang also told the reporter that he had bought one Dongfeng vehicle configured with Yuchai engine, and the engine has not been overhauled after having been in operation for 360,000km.

Zhao Rongjun, general manager of Shaanxi Xianyang Xiqin Transportation Co., Ltd., said that the company had purchased 15 sets of Dongfeng LNG tractors configured with YC6MKN engine since April. He was satisfied with Dongfeng LNG vehicles except high repair cost and expensive spare parts. He said, the trucks have not been overhauled, and have made profits for half a year.

Lv Xueyin, general manager of Shaanxi Yulin Shenghua Industry & Trade Co., Ltd., told the reporter that 80% of the users would designate engines when they purchased commercial vehicles. Users in Shaanxi have high degree of cognition towards Yuchai engine, and many users not only designate to use Yuchai engine but also directly indicate the power. Among the 400 sets of commercial vehicles which have been sold by the company, 70% of them are equipped with Yuchai engine. Most of users reflect that Yuchai engine has thick cover, strong power, and high cost-performance ratio.

In 2013, the sales volume of Yuchai in Shaanxi market achieved another record high. According to introduction made by He Xiangren from Shaanxi office of Guangxi Yuchai Machinery Co., Ltd., the sales volume of Yuchai in Shaanxi was doubled. Only the Yuchai people understand what proportion of the sales volume is accumulated by support of automobile dealers and users praise.

Shanxi Part: Focus on Energy Card

As a major province of energy, Shanxi is rich in coal and coalbed methane, which provides large amount of business opportunities for commercial vehicles inside and outside the province for transportation of coal and fuel gas. Guangxi Yuchai Machinery Co., Ltd. (hereinafter referred to as Yuchai) firmly seizes the opportunity, dominates the dump truck market in Shanxi, and further opens up a new oasis for LNG vehicles.

Oasis of LNG Vehicles

Shanxi started introducing the strategy of Gasifying Shanxi in 2010, planning to make the most of coalbed methane, coke oven gas, coal-to-natural gas resource to purify the air, reduce emission, and carry out transformation of the utilization mode of energy, which provides the sales of Shanxi LNG vehicles with a market space and opportunity.

Zhang Xiaoling, project manager of Shanxi Xinxiu Energy-saving Technology Service Co., Ltd., introduced that since March of previous year, the company had sold over 100 sets of C&C LNG trucks manufactured by C&C Trucks, having become the largest dealer of C&C Trucks in Shanxi. C&C Trucks focuses on middle and high-end products, mainly taking engine as appraisal standard. C&C Trucks mainly configure Yuchai YC6K engine on its vehicles. This model of engine is researched and developed by the original team which designs the AVL of latest engine for trucks of some big European company, realizing advanced technology and prominent energy consumption, especially reliability and stability in its true sense.

Vehicle price of C&C Trucks is generally RMB 10,000 to 20,000 Yuan higher than that of products of the same kind, but the company provides two attractive conditions for users. First, the company provides the users with a better financing platform. Compared with ordinary loans, the platform may bring more favorable terms for users. Second, the company is currently the only one enterprise in Shanxi transportation industry which wins the special subsidy for energy conservation and emission reduction, so it may offer the users with definite financial support. So far, risks on financing and loan have not occurred to the company. Many users have carried out repayment for over one year, and the credit risk undertaken by the company is becoming smaller and smaller.

It is understood that in 2012, the sales volume of LNG commercial vehicles in Shanxi was 5,000 sets, and it is expected to increase to 10,000 sets in this year. Zhang Xiaoling expressed that the company pays attention to the sales of C&C LNG trucks and has become a dealer of C&C Trucks from a big customer. In case the companys subsidy is offered in the next year, sales of C&C Trucks will be further expanded.

LNG Vehicle Still Have Chances

As an automobile dealer which has engaged in the industry for near 20 years, Jiexiu Hengsheng Automobile Sales & Service Co., Ltd. (hereinafter referred to as Hengsheng) is also fully aware of business opportunities contained in the strategy of Gasifying Shanxi.

In October 2012, the market had strong reaction towards LNG vehicles, and 200 trucks were ordered in a short period. said Hu Jingang, president of Hengsheng. He went to Dongfeng Headquarters, but at that time, only subsidiaries of Dongfeng manufactured LNG commercial vehicles which were configured with engines self-produced by Dongfeng. He said to manufacturer that due to the use preference of Shanxi users, he would order 20 LNG trucks which should be equipped with Yuchai engine. In the later stages, limited by various factors such as gas station, this batch of LNG vehicles didnt operate well.

We spent RMB hundreds of thousands Yuan on the project, but we totally researched LNG vehicles. I think that we could not ignore gas engine and we will not give it up in the future. further explained Hu Jingang. At present, Shanxi is in the process of energy transformation, and will exert more efforts to the development of deep processing of coalbed methane and coke oven gas. In Shanxi Jiexiu, 4 coking enterprises have been approved by the state. Although construction has not yet been commenced, coal conversion will be an inevitable development trend. When the coal market turns better, LNG vehicle will be a development direction. Natural gas for LNG vehicles in Shanxi is mainly obtained from the project for delivering natural gas from west to east, which causes that the cost for the current utilization of natural gas is much higher than that for coalbed methane of Shanxi, so the price will be accordingly higher.

In addition, Hu Jingang introduced that in the strategy of Gasifying Shanxi, local government converted the quantity of fuel gas used by vehicles into tunnage of fuel oil, and then offer subsidy as much as RMB 2,000 Yuan for each ton. Only logistics transportation companies with certain qualification can apply for such subsidy, so only a minority of transportation vehicles could get the subsidies in the condition that a majority of transportation vehicles are scattered. Meanwhile, local government also offers logistics transportation companies with favorable terms with regard to taxation, so Hengsheng predicts that the future logistics market will be in a centralized pattern. The company is recently tracking the orders of logistics companies, so as to lay foundation for further expanding sales of LNG vehicles.

Xinjiang Part: Paradise of CNG Vehicle and Yuchai Machinery

When you arrive in Xinjiang, you are in the paradise of CNG vehicles and Yuchai machinery. In Xinjiang, 98% of Dongfeng CNG commercial vehicles are configured with Yuchai engines, while among the 1,800 commercial gas vehicles sold in Xinjiang, 1,150 sets are Dongfeng CNG vehicle. In this way, the configuration rate of Yuchai engine in 1,800 commercial gas vehicles in Xinjiang reaches as high as 60%.

Just A Legend

In Karakax County of Hotan, Xinjiang where is rich in Hetian Jade, Ai Haijiang, manager of Makani Automobile Transportation Co., Ltd. told us a real and interesting story.

A logistics company in Xinjiang simultaneously purchased 15 sets of Dongfeng CNG vehicles in the previous year. They were the first user of CNG vehicles and they purchased a large amount of CNG vehicles, so people successively asked about the use situations from the company. On every occasion when asked by other people, person in charge of the company would say: the vehicles are not good at all; I prepare to sell them; and Yuchai engine is also not good, which scared other people, and they dared not to buy Dongfeng CNG vehicle.

Ai Haijiang also called such person for consulting before purchasing Dongfeng CNG vehicle. He was replied: Dongfeng CNG vehicles are not good at all, and if you want, I sell my CNG vehicles to you.

However, Ai Haijiang didnt take the persons advice. Makani company purchased 120 sets of Dongfeng CNG vehicles which were equipped with YC6MKN375 in the previous year and 90 sets in this year, with all vehicles in good operation state.

Later, Ai Haijiang understood the true reasons. The person in charge of that company signed a contract for strict confidentiality with the drivers of the company after purchased Dongfeng CNG vehicles, and the drivers are warned: if you dare to say that CNG vehicles are not bad, I will immediately dismiss you. Ai Haijiang also asked drivers of such company about the service conditions of CNG vehicles, and what the drivers replied is: I dont know. Dont ask me. Meanwhile, the person in charge of such company also reached consensus with the vehicle dealer: you allow me to make profit for two years with these CNG vehicles, and then you promote the vehicles after I earn enough money.

Ai Haijiang also told the reporter of China Industry News that Hotan was basically the area which used CNG vehicles at the earliest time and purchases the greatest amount in Xinjiang, and the sales of CNG vehicles in other areas were quickly pushed with the spread of Dongfeng CNG vehicles of Makani Company in Xinjiang.

So, what are the practical service conditions of CNG vehicles?

Tusuntuokedi, another manager of Makani Company said most of drivers reflected that CNG vehicles and Yuchai machinery were in excellent service condition and the vehicles supported continuous operation. In addition, the drivers also had no worries about failure of engine, because the service station would carry out maintenance as soon as possible in case of failure, and they could continue their transportation after the vehicles are repaired.

In Yuchai Service Station of Hotan, a Wei nationality driver who just finished vehicle maintenance said that he had just spent over RMB 400,000 Yuan on purchasing one Dongfeng Tianlong LNG vehicle in Urumqi which was the 8th one since the year before last when he began to purchase Dongfeng Tianlong CNG vehicle. He said that Dongfeng and Yuchai provided excellent and timely services. After the connecting rod of one vehicle broke in August of this year, Yuchai soon repaired for him. Moreover, some other vehicles which have serviced for about 200,000km have not been overhauled. Tang Yongchang, general manager of Hotan Jinda Automobile Technology Service Co., Ltd. and director of Yuchai Service Station of Hotan, said that the inventory of commercial vehicles in Hotan became larger and larger; especially the constant increase of sale volume of LNG vehicles in recent years, the amount of after-sales services increased accordingly; the annual service amount of the service station only needed RMB 50,000 Yuan three years ago, but it increased to RMB millions Yuan now. Xiao Kaiti, vice general manager of Huawei Hotan Power Generating Co., Ltd., also indicated that construction of power plants of the company were about to be started; the company prepared to purchase 50 sets of Dongfeng LNG vehicles in early stages; and it is estimated that over 100 sets would be necessary in later stages.

Overwhelming Gas Price

We had already learnt the good sales of CNG vehicles and high configuration of Yuchai engine before, but when arriving in Xinjiang, especially in Southern Xinjiang, we were inevitably astonished by the low CNG price and high popularity of CNG vehicles in Xinjiang.

It is understood that the price of CNG in Southern Xinjiang in previous years was lower than that at present, only RMB 1.6 to 1.8 Yuan per cubic meter. The gas price of Urumqi is higher than that of surrounding areas, but inside Urumqi, most taxis are refitted to CNG vehicles, and some family cars are also refitted, even some BMW, and Lexus vehicles. Since this year, the gas price has increased to RMB 4 Yuan/m3 in Urumqi, and RMB 2 to 2.8 Yuan in areas of Southern Xinjiang such as Aksu, Kuqa, and Hotan. The gas price has increased to such level, but the price in Xinjiang is also so low that could make you astonished when compared with that in inland areas. Wang Jianjun, vice general manager of Xinjiang Outlet Center of Dongfeng Commercial Vehicle, introduced that they had made a calculation: taking the gas price as RMB 2.6 Yuan/m3, the operating cost of each kilometer for CNG vehicles in the standard load condition was RMB 1.3 Yuan, and RMB 0.9 to 1 Yuan in the no-load condition, more economical than that of oil vehicles. In Hotan, person in charge of Makani Company gave a more direct datum: taking the gas price as RMB 2.8 Yuan/m3, the cost difference between a CNG truck and a fuel oil truck for a round trip for from Hotan to Urumqi (3,000km) was RMB 6,000 Yuan.

In Shanxi and Shaanxi, we heard various worries of some users about safety of CNG vehicles, but in Xinjiang, such worries were barely heard. As far as that point, Wang Jianjun expressed that many users in Xinjiang had 4 to 5 years experience in using CNG vehicles and new buyers almost had no doubts to the safety. While ten years ago, the gas dealers had imported a batch of high-end gas vehicles and delivered LNG from Urumqi to Lianyungang. In consideration of the abundant gas resources, the gas dealer had also gone to Dongfeng Motor Corporation and hoped to distribute gas vehicles. Such conception came true unexpectedly several years later.

All problems on promoting gas vehicles in other provinces to increase the configuration of Yuchai machinery, such as small quantity of gas stations, high price of gas vehicles, safety problems of gas vehicles, and power problems of gas vehicles, are resolved in Xinjiang. At the moment when gas price is in the state of absolute advantages and when economical efficiency is an overwhelming factor, the invisible and impalpable hand seems so powerful and energetic.

Mutual Support with Dongfeng

Along with the rapid rise of CNG commercial vehicle in Xinjiang and brand effect of Dongfeng, Yuchai gas engine also leads the Xinjiang market all the way by relying on the East Wind of Dongfeng CNG vehicle.

In Xinjiang, CNG vehicles were successively marketed 4 to 5 years ago, but the rapid market expansion, especially recognition of Xinjiang market towards Dongfeng CNG vehicles, was started in last year. It is understood that Xinjiang Outlet Center of Dongfeng commercial vehicle sold 390 sets of commercial vehicles of which 300 sets were configured with Yuchai Gas Engine for heavy trucks.

Xinjiang is known as the paradise of freight market, with endless goods and profits, with the annual increment of commercial vehicles between 15,000 to 18,000 sets, being a place of strategic importance for various large vehicle manufacturers. In terms of the market share of recent ten years, Dongfeng doesnt accounts for a high proportion, with about 4,000 sets of commercial vehicles annually marketed to Xinjiang. However, in recent two years, the rise of Dongfeng with regard to CNG vehicle models has substantially lifted the market share of Dongfeng road bicycle. In terms of calculation based on the sales volume road bicycles in Xinjiang being 6,000 sets, Dongfeng accounts for 40%. This year, in Xinjiang market, the sales volume of Dongfeng CNG vehicles which are equipped with YC6MKN375 engine is near 1,000 sets. Wang Jianjun said, outburst of gas engine occurs in this year. Stable quality of Yuchai engine brings us a steady flow of users.

It has been a consensus that the operation profits of commercial vehicles becomes lower and lower. As far as phenomena in recent years, such as differentiation of dealer group of commercial vehicles, diversification of business direction, and behaviors related to repairpersons of large vehicles job-hopping to small vehicle stores, it is not difficult to find and prove such consensus. However, on the other hand, some individual varieties which have high profits are not excluded. Wang Jianjun emotionally said, profits always come from excellent products and new products. The first batch of dealers for marketing Dongfeng CNG vehicles in Xinjiang made huge profits, with the profit of one set vehicle being 50,000 to 60,000 Yuan. He added, we have achieved the profit indicators given by the headquarters half a year ahead of schedule, which largely relies on the contribution of Yuchai engine.

Wang Jianjun was confident in the sales trend of CNG vehicles in Xinjiang in next few years. He said, we hope that the outlet center would market 1,000 sets of Dongfeng commercial vehicles in Xinjiang, reaching 50% of the market share, and the sales volume of CNG would increase by 100 to 200 sets. Actually, we could have sold more CNG vehicles in this year. From June to September, our monthly orders were 40 sets, but the manufacturer didnt supply the vehicles in time.

In the process of close connection and mutual support, Yuchai and Dongfeng have opened up a new space in Xinjiang.

(Source: China Industry News, Yan Manqing, He Haifeng)