According to a report by Hunan Daily on February 16, a new business model is set to enter the Hunan market in the first half of this year. This model, inspired by large appliance chains like Gome and Suning, involves unified management, centralized purchasing, standardized pricing, consistent branding, and uniform service standards. It aims to bring automobile sales under a franchised chain system, similar to how supermarkets operate. The goal is to streamline the car buying process and make it more accessible for everyday consumers.
Wang Cunrui, chairman of Changsha Hengxiang Automobile Trading Company, is confident that this approach will revolutionize the automotive industry in Hunan. “With lower operating costs, higher service standards, and a focus on efficiency, we aim to integrate the market, leverage economies of scale, and sell cars like appliances,†he said. “This way, ordinary people can enjoy greater benefits.â€
Currently, the cheapest car in China starts at over 20,000 yuan, while mid-range models suitable for families cost more than 100,000 yuan. Plus, the ongoing costs of car ownership are high, making it difficult for many working-class individuals to afford a vehicle. Some experts argue that the high price of cars isn’t just due to manufacturing but also the significant marketing and distribution costs passed on to consumers.
To reduce these costs, Wang proposes a franchise-based model. By selling cars like retail goods, the company can cut down on overheads and offer more affordable options. Hengxiang plans to launch its chain operations in March, with franchising expansion in Hunan. The company, as an authorized dealer for Dongfeng Liuzhou and Jiangnan Alto, has a strong financial foundation and annual sales exceeding 100 million yuan.
The pilot brand for the chain will be Jiangnan Alto. As the general agent in Hunan, Hengxiang will have more control over the operations. “Once the trial is successful, we plan to expand into commercial vehicles,†Wang said. Under the company’s credit policy, customers can purchase a Jiangnan Alto with a down payment of less than 10,000 yuan and monthly payments of several hundred yuan.
This model is not new globally. Franchised chain networks are widely used in Europe and the U.S., where traditional 4S stores are shrinking due to high operational costs and inefficiencies. In contrast, chain operations offer a more streamlined and cost-effective approach. According to reports, the franchise model allows for shared resources, reduced investment risks, and better training and support for franchisees.
Hengxiang’s approach includes five key benefits: access to low-cost auto inventory, preferential agent rates, reduced capital pressure, comprehensive training, and unified management across all branches. This ensures consistency in branding, service quality, and customer experience.
Successful examples include Guangwu Auto Trade, which operates over 115 stores nationwide and sells more than 100,000 vehicles annually, and Beijing Yafei Auto, which has expanded to over 300 locations. These models show that the franchise approach can significantly boost sales and improve efficiency.
For dealers, the biggest advantage is the lower entry barrier. Wang estimates that setting up a Jiangnan Alto franchise requires an initial investment between 100,000 and 150,000 yuan. The headquarters provides full support in terms of training, technology, and sales strategies, reducing both financial and managerial burdens.
Looking ahead, Hengxiang plans to open stores in major cities across Hunan, focusing on high-traffic areas and establishing after-sales service centers in proportion to the population and consumer demand. Experts from Hunan Business School believe that traditional auto dealerships and 4S stores are facing significant challenges.
Wang concluded, “Our decision to adopt a franchised chain model is well thought out. We’re committed to transforming the automotive industry with a more advanced and consumer-friendly marketing strategy.â€
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