After the first half of the price war, Chery Automobile learned to respond quickly and began to study its suppliers.

The first half of China's new energy vehicle price war has ended, with the landmark event being the withdrawal of European and American brands such as Mercedes-Benz, BMW and Audi.

Domestic brands will definitely not retreat as they still have the second half.

Just like the development path of the home appliance, mobile phone and other industries, what domestic automobiles can do is to continuously adjust to reduce costs and increase efficiency until there is no more gunfire on the battlefield, and of course, there will not be many competitors left.

In the last round of fighting, Chery's voice was relatively weak. Just when everyone thought it would remain as pure as jade, the big move came. It turned out that Chery was not unwilling to participate in the battle before, it was just retracting its fist to accumulate strength.

Recently, there was news that Chery issued a 14-dimensional cost reduction measure internally and required all suppliers to follow suit.

In fact, before the introduction of this measure, Chery had already started the work of reducing costs and increasing efficiency, including design optimization, reducing the number of parts, using integrated parts, reducing unnecessary processing and transportation links, improving the qualification rate, and using new technologies, new materials, and new processes.

Therefore, the new regulations are mainly about studying suppliers. Chery originally managed suppliers only up to the first-tier suppliers, but now it will extend this to the second-tier and third-tier suppliers, vertically integrating the entire supplier system, and will also actively cooperate with suppliers on technology to drive down costs.

Specifically, Chery will study the second and third-tier parts, and if it finds a cheaper price or a more optimized material or process, it will ask the first-tier supplier to switch immediately. At the same time, Chery also specifically requires that the quality requirements should not be relaxed while reducing costs.

Chery's life is not bad, so making such a big fuss is like preparing for a rainy day like repairing the roof while the sun is shining.

In the first half of this year, Chery Automobile's cumulative sales reached 1.1 million vehicles, a year-on-year increase of 48.4%; sales of new energy vehicles were less, but also reached 180,000 vehicles, a year-on-year increase of 181.5%; exports were 532,000 vehicles, a year-on-year increase of 29.4%.

Under the bright book data, Chery's cost-cutting measures seem to hide some unspeakable secrets. The reason has been mentioned above, it is a math problem, 1.1 million - 530,000 = 570,000. In half a year, Chery sold less than 600,000 vehicles in the domestic market.

For comparison, let's look at Geely. In the first half of this year, Geely sold 955,730 vehicles, a year-on-year increase of 41%; overseas sales reached 197,428 vehicles. Through this elementary school math problem, we can know that Geely sold nearly 760,000 vehicles in China in the first half of the year.

A simple calculation shows that the domestic sales volume of Chery and Geely in the first half of the year is close to 200,000 units. The number is not really large, but it is not small, roughly equivalent to two Beijing Hyundai or one GAC Toyota.

Only the feet know whether the shoes are comfortable or not. Chery certainly knows what happened to him.

In the domestic market, in the first half of this year, Chery only had two models, Tiggo 8 and Jetour Traveler, that achieved monthly sales of over 10,000 units, lacking a truly popular model. In today's fierce market competition, this state of having too many but not too few products is quite dangerous.

Exports are important, but China is always the main base. Moreover, Chery mainly exports fuel vehicles, and the main market is Russia. Chery is not a Transsion mobile phone. It is impossible for Chery to be unknown in China but have one in every person in Africa thousands of miles away.

In addition, Chery's new energy business performance is also quite average. In the past year or so, Chery has launched a number of C-DM electric hybrid models, but the market feedback is average, and none of them can maintain a stable monthly sales of more than 5,000 units.

The growth of data cannot explain the brilliance of the battle. The outstanding performance of some parts just shows that the rain and dew are not evenly distributed. Therefore, Chery launched 14 major measures to reduce costs and increase efficiency.

In the domestic market, Chery has not gained the leading position in both fuel vehicles and new energy vehicles. If market competition intensifies further and the price war continues, it will inevitably bring a greater impact to Chery.

In fact, except for a few manufacturers who have the "pricing power" to initiate price wars, most manufacturers can only follow. In this case, Chery took the initiative to reduce costs and increase efficiency, and the timing was right.

These cost-cutting measures introduced by Chery are not unexpected. Or it can be said that these are the only measures Chery can implement when product performance is unlikely to be significantly improved in a short period of time.

Optimizing processes, adopting integrated components, using new technologies and processes, and strengthening vertical management of suppliers are all common cost reduction measures in the industry. For example, Chery cooperated with a supplier to reduce the weight of the suspension system, successfully reducing costs by 23.9%.

Strengthening the vertical management of suppliers, in other words, requires suppliers to be fast, good and cheap, and the pressure is passed down level by level. To put it bluntly, the OEMs are still asking suppliers for profits. Chery may benefit from it in the short term, but in the long run, suppliers also have their own considerations, and no one will lose money to accompany you to "increase efficiency".

Chery and BYD can both reduce costs and increase efficiency in the supply chain, but Chery may not be able to do it well. The essence of the supply chain is finance. BYD's DiChain digital bond certificate platform exceeded 400 billion in scale last year. Can Chery's Ruijing Industrial Procurement Platform have this scale?

Finance is the fundamental driving force for suppliers to continuously and willingly provide high-quality and low-priced products, and all the major banks are behind it. However, judging from Chery's approach and related data, it does not operate Ruijing as a financial platform, but still uses the old factory procurement process.

According to interview data from Anhui Daily, the purchase amount of Ruijing platform in 2023 will exceed 20 billion yuan, and the cost will be reduced by 2.2 billion yuan, a decrease of more than 11%. Obviously, this is completely different from BYD's Dichain.

After launching this measure, Chery specifically emphasized that cost reduction cannot be achieved at the expense of quality. How do you understand this sentence? Has Chery already had a psychological expectation for this? The three elements of project management are "quality, time and cost". Breaking one of them will inevitably lead to changes in the other two.

Fuel vehicles account for the majority of Chery's sales. The technology and processes in the supply chain are already very mature, and the costs are very transparent. Overall, there is not much room for compression. It is really curious how it can be compressed.

Chery is reducing costs and increasing efficiency in order to cope with price wars; if it can successfully reduce costs, it can continue to stay at the price war table. But reducing costs is not a long-term sustainable strategy, and it cannot solve Chery's fundamental problems. Chery's main problem in the domestic market is that its products are not recognized by more users, which can be directly seen from its sales.

Cost reduction is the manufacturer's business and has nothing to do with consumers. The best way to deal with price wars is to improve products, because consumers buy cars based on the car itself, and they will not buy a certain car just because the manufacturer "cries poor".

Money is earned, not pinched. The 243 auto parts companies listed on the A-share market must agree with this simple truth. Whether Chery admits it or not is actually not a big deal. The market, as a ruthless teacher, will naturally teach a lesson to any participant who does not abide by the rules.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.