(Yicai Global) April 16 -- The recreational vehicle unit of leading Chinese automaker SAIC Motor Corp. aims to benefit from growing demand for products from the country’s increasingly affluent population.
"In China’s board market, the number of RVs per million people is only 0.57 percent of the penetration rate seen in the US market, and 0.86 percent compared to that of Europe,” Zhu Weidong, general manager of Shanghai-based SAIC Maxus Recreational Vehicle Technology Co., told Yicai Global. The Chinese market can provide infinite prospects if the firm takes a broader view of the markets, he added.
RVs are fast becoming a new mode of travel among China’s tourist population. Maxus entered the sales market four years ago but found that purchasing such vehicles was not an attractive prospect for many Chinese consumers.
The company’s annual RV sales numbered in the tens of vehicles over the first few years of operation, and barely exceeded 100 vehicles prior to 2016.
Younger Consumers Prefer Leasing
With a deeper understanding of the market, the firm found that “most domestic RV buyers are elderly retired couples with a certain economic base and ample free time, while younger people prefer to lease such vehicles,” Zhu said.
"RV lessees need more and better services compared to ordinary car rental users,” he said, adding that most RV lessees have no travel experience using them. They do not understand the difference between an RV tour and a regular tour, and where to rent a RV or organize a route, Zhu added.
Traditional travel companies are familiar with travel routes, but do not quite understand the business of RV camping; car rental companies have standardized car rental processes but cannot provide users with professional consulting and services, Zhu pointed out.
Building a Tourism Ecosphere
Maxus then decided to build an RV tourism ecosphere, integrating a closed system of camps, rental and travel agencies, while providing services for users online, to develop a sustainable RV travel-ecology.
The company has partnered tourism operators such as Shanghai Lvmama Xinglv International Travel Agency Co. and Spring Airlines Co’s Springtour.Com among others in recent years to develop customized RV tour routes in several destinations popular with tourists such as Hainan and Chengdu. It has also set up a social media platform named RV Lifestyle containing help with travel plans and video content, as well as a one-stop service platform for RV rental, group travel, and camp bookings.
Maxus RV has set up eight operations centers to date located in Beijing, Shanghai, Guangzhou, Qingdao, Hainan, Xining, Chengdu, and Kunming to develop RV tourism routes. The company's RV tourism ecosphere formed a chain of camps with more than 1,000 parking berths for RVs last year, which could increase to 10,000 by 2020.
Business Model Challenges
Although Maxus aims to grab a slice of the tourism market, it is proving a difficult goal to achieve. Traditional automakers are engaged in bulk trading operations associated with high-value transaction while travel service providers deal with high-frequency but low-priced services. Therefore, a shift in thinking and marketing is needed.
For now, however, the transition from automaker to provider of mobile travel services is fast-becoming an industry trend, and tourism marks an entry point for Maxus. "Within SAIC, the RV company is a key attempt to transform the entire enterprise from a traditional car supplier to a travel service platform," said Zhu.
Maxus has recruited many professionals from internet platforms and tourism platforms to provide quality travel services and is ready to build its own independent tourism company with operation centers in different regions and countries.
Editor: William Clegg