Chapter 612: 612
“Manager Li, are you interested in coming over to take charge of our motorcycle division? After you bought the shares, I can arrange for a position of Deputy General Manager, just to handle the motorcycle business . ” Feng Yu invited Li Dafu . He had shown that he had better foresight than the Deputy who was in charge of the motorcycle division .
Sponsored Content
Li Dafu was stunned for a while and shook his head . “Manager Feng, I still prefer cars . I hope I can handle the automobile division . ”
Feng Yu nodded . Li Dafu would not look for him if he were not interested in managing the automobile division .
“Then let’s talk about the cars . What suggestions do you have for Songjiang Motors cars?”
“Other than the cargo vans, there are 3 models of cars . Small saloon car, off-road and business purpose car . Among the 3 models, the sales of the business purpose cars are not doing well . The off-roads main customer is the military . The small saloon cars are sold to the companies as the company’s vehicles . The sales of these two models should be doing well?”
“Your analysis is right . Continue . ”
Li Dafu continued . “But the price of these 3 models are above 100,000 RMB . Although 100,000 RMB is not considered a lot for cars now, the price tag will stop many people from thinking of buying cars . I feel that we should introduce a new budget model under a new brand . The price of this new model should be under 50,000 RMB or even 30,000 RMB . ”
Sponsored Content
Feng Yu thought to himself . This Li Dafu still wants to use the low-cost strategy . But luckily, he did not say he would use the Songjiang Motors brand . Budget cars will lower the value of the brand . It will influence their plans to continue selling mid to high tier cars .
Feng Yu had also thought about introducing low-cost cars . But in his previous life, low-cost cars entered the market after the year 2000 . That was the time when China’s development increased rapidly, and the demand for vehicles was high . People want to own a car for their transportation .
But now, people’s mode of transportation was still a motorcycle . Songjiang 100 was selling for about 10,000 RMB . People still do not need to worry about road conditions when they were riding bikes . The only issue was the weather .
“You think we should introduce budget cars now?” Feng Yu asked .
“Of course not . We should start to research and develop this technology now and introduce it when the time is right . I think we can introduce this model in 3 to 4 years . Our technologies should be ready by then, and the Chinese’s income would have increased . They should be able to afford a small car . Although motorcycles are good, most people will think that driving a car beats riding a motorcycle . ”
“That means you think Songjiang Motors should start to develop smaller capacity cars technologies now?”
“No . We should research both luxurious and budget cars at the same time . The brand, Songjiang Motors should stick to be a luxury brand, and we will introduce another brand to target the mass market . Both of this should be ongoing at the same time . ”
Sponsored Content
“Since we are going to develop technologies for both types of cars, then how much more money should we invest into the R&D? With so much capital invested, when will we recover our investments?” Feng Yu asked .
“Automobile manufacturing is a capital-intensive business . But technologies are critical in this business . If not, our Chinmade vehicles will not need to collaborate with MNCs . The automobile manufacturers in other countries rely on their technologies to earn profits . Our Songjiang Motors might have the best technologies in China, but compared to other overseas manufacturers, we are still outdated . If our technologies cannot keep up with the rest of the world, then we can only remain in China . Even the European market will be taken over by other automobile companies . ”
In Feng Yu’s previous life, Geely had a strong emphasis on technological developments . They had acquired Volvo, not only for their brand . They wanted Volvo’s technologies . This was why Geely paid such a high price for a declining brand .
Feng Yu had kept telling Li Mingde to focus on technological developments . Without technical advantages, they could only exploit their workers . If this was the case, then what’s the use of manufacturing cars?
Feng Yu only knows about the development of the automobile industry . He knows about future technologies in the industry . But he does not know how these technologies were invented .
Luckily, Bing City Machinery Company had hired lots of specialists and experts . Many of them were engineers from the former Soviet Union . The company was also grooming Chinese engineers all this while .
Sponsored Content
Compared to the big automobile manufacturers overseas, Songjiang Motors’ developments were not considered fast . But they were not slow either . Songjiang Motors technologies were much faster than those Joint venture factories in China .
Songjiang Motors could develop in China was not because they were more technologically advanced . It was mainly because of its exterior designs, performance, prices, etc . Most importantly, it was the procurement from the Government and military .
Since the military had bought Songjiang Motors vehicles, the Chinese knew about this brand . Songjiang Motors vehicles were also exported to Europe . Many provinces’ government starts to make bulk purchases of Songjiang Motors cars .
In Feng Yu’s previous life, these local governments will only purchase SAIC and FAW vehicles . They will use either Audi or Santana . But for the same price, Songjiang Motors were better looking and more comfortable . Most importantly, it was their domestic brand . The local governments were considered supporting their domestic brands when they purchase Songjiang motorcars . This was also an excuse for the agencies to buy cars without getting scolded by their higher-ups .
These few years were the years where business purpose cars developed the fastest . Almost all the local governments were buying vehicles in large volumes . There was someone in Feng Yu’s previous life that tabulated the expenditure on cars by the government in 1995 . The amount spent on cars by the government was astronomical, and it still increases for the next few years .
The Chinese Government had to restrict the number of vehicles bought by the local government . Feng Yu had only snatched the market from the overseas manufacturers and used the profits from there to upgrade Songjiang Motors technologies .
Li Dafu had lots of ideas that were in line with Feng Yu . Feng Yu was impressed by Li Dafu and felt that it was not a bad idea to let him handle the automobile division .
“Manager Li, I agree with your views . You are suitable to work in Bing City Machinery Company . Now you can tell me how much money you have to buy the shares . ” Feng Yu smiled and asked .
“If I sell away my company, I should have about 60 to 70 million . With my savings, I should raise about 80 million . I would like to buy 2% shares . ” Li Dafu replied .
“Manager Li, your company is doing well . Don’t you think it is a waste to sell off your company? You might not get so many profits after to buy our shares . ”
“My company had reached its limits . Unless there is an injection of funds, we will not make any breakthroughs in the materials . Also, I think highly of the future of the automobile industry . I feel that the value of Bing City Machinery Company shares will multiply several folds in 3 to 5 years later!”
“Good! For your trust in us, I will give you a personal loan of 2 million without interest . You will be able to purchase 2 . 5% of shares . What do you think?”
Li Dafu was overjoyed . “Thank you very much . Manager Feng, I promise to put in my 100% to bring Songjiang Motors to a greater height!”