(Yicai) Aug. 22 -- Automotive joint ventures in China have started exploring unified direct sales pricing models to boost sales and regain their market shares, which have shrunk in recent years due to fierce competition.

FAW-Volkswagen Automobile, the partnership between China’s FAW Group and Germany’s Volkswagen Group, adopted the direct sales model for its new sports utility vehicle Talagon earlier this month.

“The top feature of the Talagon’s new sales model is its uniform and transparent pricing,” FAW-Volkswagen’s General Manager Wu Yingaki told Yicai. “No matter when or where customers buy the car, there is no room for negotiations.”

If this direct sales model proves successful for the Talagon, FAW-Volkswagen will also adopt it for other car models, Wu noted.

Before the pilot implementation of the direct sales model for the Talagon, FAW-Volkswagen had already tested this model with the Golf GTI, a relatively niche product. Sales of the Golf GTI doubled after transitioning to direct sales.

SAIC-GM, the JV between China’s SAIC Motor and US General Motors, implemented the direct sales model for the Buick Envision Plus at the end of last year. As a result, its monthly sales more than doubled to over 10,000 units from under 5,000 units.

Auto JVs previously adopted the dealership sales model, authorizing 4S (sales, spare parts, services, and survey) stores to independently manage sales and after-sales services. However, when sales declined, dealerships began offering discounts to tackle competition, which led to losses for all parties, prompting automakers to explore different sales models.

When carmakers adopt a direct sales model, product prices will become standardized, helping maintain brands’ premium value and market stability, industry insiders told Yicai. This approach also prevents customers from hesitating to buy due to fluctuating sales prices and allows dealerships to shift their focus toward providing better services, they added.

The combined market share of auto JVs in China dropped to a historic low of 34 percent last November but recovered to 36 percent in the first half of the year, as some brands showed signs of recovery, according to data from the China Passenger Car Association.

Editors: Tang Shihua, Futura Costaglione