2003: Starting with Foreign Trade

Chapter 648 The Heartache of Test Driving (Seeking Guaranteed Monthly Tickets)
"Money earned in the North Warehouse is spent in the North Warehouse; don't even think about taking a single penny home."

"What are you talking about? I brought you here to test drive the car, not to spout nonsense."

"Tell me, isn't that right? Let's not even talk about clothes. You have cars ranging from 2000 to 2 yuan, and there are even small cars in the back. You really make money like crazy."

"Bullshit! I'm calling this comprehensive service to consumers, so that different groups of people can enjoy the right to travel with ease."

"Hahaha, you're really shameless."

"Stop talking nonsense and tell me about your driving experience. You said you wanted to test drive it, so what are you complaining about now?"

"How was I supposed to know it was this thing? I thought it was the Yuechi A1 that had been released. What kind of driving experience could this piece of junk have?"

In the scorching July heat, at the Leichi New Energy Vehicle test track, the two brothers, Tan Jincheng and Zhang Xupeng, kept bantering, leaving the onlookers unsure whether to laugh or not.

This is truly a memorable scene. The two big bosses kept swearing, and what was supposed to be a test drive looked more like two brothers bickering.

Zhang Xupeng's mouth was like a machine gun, still talking: "However, with a price of 1 yuan, what kind of experience do you expect? Putting aside everything else, for our company's employees, having one to commute to work is much more comfortable than taking the factory bus or riding an electric scooter in this hot weather."

"Oh, so this is what you mean by making money in Beicang and spending it in Beicang?"

"Tell me, isn't that right? But is it even profitable to sell a car for 1 yuan?"

"Haha, there's money to be made."

With readily available blueprints and suppliers, the S1 laboratory easily produced a sample in three months through 3D modeling, debugging, and so on. The workshop produced dozens of vehicles in small batches, and today is the test drive day.

Tan Jincheng called a group of friends and the company's technical staff to test it together and see what could be improved.

Zhang Xupeng, who originally thought he was going to test drive the Yuechi A1, excitedly rushed back from out of town after hearing the news, only to find out it was the Leichi.

Yeah, that's pretty shocking.

It comes in two colors, yellow and blue, and the car is available in both an ultra-compact version and a standard four-seater version. The compact version only has three seats, one in the front and two in the back, which looks quite comical.

Even the standard four-seater is quite small; a tall person probably wouldn't be able to fit in.

There was absolutely no user experience to speak of, but its low price was irresistible. After Tan Jincheng told Zhang Xupeng the price, he knew this thing would definitely sell well.

The market for "old man's cars" actually started in 2006. At that time, Shandong Province's Leding had already entered the low-speed electric vehicle market, and "old man's cars" emerged as a result. In 2008, Liaocheng made an unprecedented move by passing regulations that allowed "old man's cars" to be legally driven on the road.

Therefore, sometimes as long as an industry can make money, there's no need to worry about rules; just go for it.

Those who came before us pave the way, and those who come after us benefit from it.

Reading has paved the way for the market. Although the market size is not large yet, Reading's entry into the elderly care vehicle market at this time undoubtedly has a good market prospect.

The entry-level model sells for 1 yuan, which is the market price. Tan Jincheng plans to set the factory price at 8500 yuan.

Can I make money with 8500 yuan?

For a typical manufacturer, this would be a meager profit, but not for Leichi. The supply chain advantages established by Leichi Technology are fully demonstrated at this moment.

The battery, motor, and controller are all our own, and even the frame is owned by a company in which we hold shares. We've solved the core costs, so the other miscellaneous costs are minimal.

The remaining costs are labor, factory space, and so on.

All things considered, the cost of a Leichi low-speed electric vehicle with a market price of 10,000 yuan is about 7000 to 7500 yuan, and the gross profit can reach up to 1500 yuan.

Industries with a gross profit margin of 10% to 15% are definitely worth doing.

This is only the initial stage. If we wait until mass production begins and sell 10 or 20 vehicles a year, the cost can be reduced even further.

In terms of marketing, this old man's car doesn't need large-scale marketing at all. For products sold in small counties, all you need to do is offer enough discounts. As for advertising, there's no need to appear on TV stations at the city level or above.

"That's outrageous. This thing is a four-wheeled vehicle, yet it's sold for such a low price and they still make a profit."

Zhang Xupeng sighed a bit, then added, "It's just that there aren't enough cars. Having only two models is too monotonous."

"What do you think?"

Tan Jincheng did not answer Zhang Xupeng's question, but instead asked the other people involved in the test.

"Just as Mr. Zhang said, there are too few car models, making it too monotonous."

"Haha, this is just a trial production. We are already continuing to develop the new model."

Two models are definitely not enough; if necessary, we can even build knock-off versions of luxury cars.

In addition to mass-produced models, Tan Jincheng also plans to pursue a customized approach, which can be understood as a toy-like vehicle for the elderly, offering small-batch customization services to interested groups.

The profit margin for customized products can be quite substantial. The production cycle for these "old man's cars" is actually very fast; they can be off the production line and launched into the market in about 10 days.

Tan Jincheng has also thought about the distribution channels. In the initial stage, he can make use of the channels established by two-wheeled electric vehicles.

In third-tier cities and below, as well as small counties and rural markets, these terminal stores sell their products. In addition, there are also many stores in villages and towns selling Shanchi tricycles.

In addition to preferential supply methods, there are also methods such as cash rebates or order discounts for completing a certain number of sales targets.

Flash Motors used the same method when they first sold electric tricycles. "Alright, alright, let's go to the office and talk, it's so hot today."

In July, standing outdoors for even a short while would make you sweat, and Zhang Xupeng couldn't stand it, so he chatted under the scorching sun.

"Yes, everyone go back, it's too hot here."

Tan Jincheng also realized what was happening.

The trial production of the old man's car went very smoothly, with almost no difficulties encountered. Tan Jincheng also seemed very confident about the market's acceptance of it.

After the group returned to the office, they dispersed. The technicians then worked to improve some of the shortcomings based on the feedback from the test drive.

When will Yuechi be able to be tested?

Back in his office, Zhang Xupeng took a bottle of water from the refrigerator, gulped it down, and asked as he did so.

This office previously belonged to Ying Jianren's brother-in-law, Wu Jianzhong. The interior was very luxurious, with solid wood chairs, bookshelves, and all sorts of other furnishings, perfectly reflecting the aesthetic style of their generation.

Now that it belongs to Tan Jincheng, he's too lazy to make any changes, he just cleaned it up a bit, since he doesn't come here much anyway.

The factory is still undertaking part of the production of the Zhongtai 2008 model, and this part of the capacity will not be eliminated until two years later. The original Beicang Zhongtai factory has an annual production capacity of 5 vehicles.

The amount used in the elderly care products was far more than they could use, and Zhongtai 2008 was selling very well. After the equity transfer, Tan Jincheng and Ying Jianren discussed that they would still take on some production and OEM tasks.

According to the contract, Leichi now helps Zhongtai produce 5000 Zhongtai 2008 vehicles every month to keep the company running.

In terms of management, there were no major changes in Tan Jincheng. Apart from Wu Jianzhong being transferred back to Yongkang and the finance and sales teams being replaced by Tan Jincheng, there were no other significant changes in personnel.

While the engineers at Zhongtai may not be good at working on cars, working on electric vehicles for the elderly shouldn't be too difficult for them. They were also the ones who assisted in the research and development process at the S1 lab.

Zhongtai Beicang Factory, now known as Leichi New Energy Vehicles, covers an area of ​​over 1000 acres. Its registered capital has been reduced to 1 million yuan by Tan Jincheng. The factory has four fully automated automobile production workshops: stamping, welding, painting, and final assembly.

The entire factory has more than 1000 employees, including 180 technical staff. The boss is really generous with the resources.

Unfortunately, it's pretty useless.

More than 60% of the parts are from companies invested in by Tan Jincheng, a feat that even established companies like Leding, known for their high-end electric vehicles, cannot match.

In terms of production capacity, if used to produce electric vehicles for the elderly, the factory has the capacity to produce 30 pure electric vehicles. According to market research, this production scale will be sufficient until 2015.

There's no need to worry about production capacity over six years.

Six years later, Tan Jincheng knew that this place probably no longer belonged to him. According to the future plans of Beicang District, a subway would be built here, and Leichi would most likely have to relocate.

Hehe, this will be another way to make a profit.

As for the person in charge of Leichi, Tan Jincheng has not changed yet. After all, at this stage, the company is still mainly engaged in OEM manufacturing for Zhongtai, and it is not certain that a different person could manage it well.

Let's just make do and get through this year first, then we'll see.

"Actually, it's already being tested, but it's in the confidential stage. You're not often in Beicang, so you might not have noticed."

Tan Jincheng accepted the bottled water handed to him by Zhang Xupeng and replied with a smile.

On Meishan Island and some remote roads in Beicang District, you can often see Yuechi A1 test vehicles that are completely wrapped up and painted in an unsightly tan color.

In the entire Beicang area, apart from Weilai, there are no other car manufacturers. If a careful industry peer were to notice this, they would be able to easily identify it.

"Oh? When will it be officially launched?"

Zhang Xupeng really didn't know. He was very discreet and usually wouldn't get involved in business outside of clothing unless Tan Jincheng specifically requested it.

Tan Jincheng sighed, "Sigh, I also want to start mass production as soon as possible. It's really painful to see that I can't make this money."

Following the rural car subsidy policy, a new car trade-in policy was introduced in May. According to the policy, in addition to the 1 billion yuan subsidy for scrapping and replacing old cars in 2009, an additional 4 billion yuan will be allocated!

For some medium, light, and micro-sized trucks and some medium-sized passenger vehicles that meet certain service life requirements, as well as yellow-label vehicles that are scrapped in advance and replaced with new vehicles, a subsidy of no less than the purchase tax amount of a single vehicle of the same type will be given.

The 50 billion yuan subsidy instantly revitalized the entire market, and almost all eligible models sold like hotcakes.

BYD's stock price has soared from around HK$20 at the end of April to over HK$40 now, more than doubling. Even auto parts companies like Shuguang Auto have seen their stock prices rise to over HK$10, with their market capitalization returning to over HK$20 billion.

In June, Yangzi Automobile achieved an unprecedented monthly sales breakthrough, exceeding 3000 units to reach 3147 units. In the first half of the year, Yangzi pickup trucks sold a total of 13425 units, making the target of 2 units for the year a breeze to achieve.

When luck comes, there's no stopping it. In early May, after taking over Huanghai Automobile, we encountered strong policy support.

The buses that Huanghai Automobile produced this year but did not sell were quickly sold to bus companies by Tan Jincheng through his connections. In addition, all of his own company's factory vehicles were replaced during the subsidy process.

Huanghai Automobile sold more in June alone than it did in the entire year of 2008.

With such good sales, the employees at Huanghai Auto naturally received substantial bonuses. It is said that when this news reached Li Xianjin, he was stunned for quite a while.

Relying on subsidies and government policies, the car market in the second half of 2009 was practically robbery in Tan Jincheng's view.

Compared to real estate, the automotive industry is actually the fastest recovering. It's heartbreaking that the Yuechi A1 can't be sold.

(End of this chapter)