NIO's Direct-Sales Model Outclasses 31 Brands Measured

Only NIO, Denza, BYD Dynasty, and Li Auto scored over 80 on an index score that measured sales service capabilities of NEV brands, highlighting the advantages of using a direct-sales model over traditional dealerships.

globalchinaev

| Oct 13
NIO's Direct-Sales Model Outclasses 31 Brands Measured
Source: NIO

In the first half of 2024, Landroads conducted a research to evaluate the sales service capabilities of 31 new energy brands in China.

Only 4 out of 31 NEV brands scored over 80% on the Chinese research firm’s index score that measured 3 dimensions: basic service capability, customer satisfaction level, and staff professionalism.

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This comprehensive analysis, based on over 1,000 visits to dealerships, provided key insights into how different brands manage their end-to-end sales and after-sales experiences.

With consumers demanding better service, brands have responded by fine-tuning their retail models to meet rising expectations.

Direct-Sales Models Outperform

Denza Retail Store
Source: Retaildesignblog.net

One of the significant findings from the study is that stores operating under direct-sales models outperformed traditional dealership models in all three metrics measured: basic service quality, customer satisfaction, and professionalism.

This aligns with the consistent performance of brands like NIO, which operates exclusively through a direct-sales model.

NIO, Denza, BYD’s Dynasty Series, and Li Auto scored above 80 on the overall index, with NIO, Denza, and Li Auto benefiting from the advantages of the direct-sales approach.

Notably, BYD, while primarily operating through a dealership model, managed to break into the top tier, thanks to the excellent service quality of its Dynasty series.

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Denza, which is a BYD-owned brand, is currently recruiting dealerships to abondan their direct-only sales model.

In contrast, Tesla, which also runs a direct-sales model, scored lower with an overall score of 72.13%, reflecting challenges with customer service despite its popularity.

Tesla’s basic service quality and customer satisfaction scores fell below the average experience, while professionalism scored above.

Lower Scores for Legacy Brands

Mercedes-Benz Dealership
Source: Gasgoo

Mercedes-Benz and Buick, both legacy automakers, were among the lower-scoring brands in the study.

The research pointed out that these companies have been slower to embrace the aggressive push towards NEVs.

For instance, Mercedes-Benz has even abandoned its plan to achieve full electrification by 2030. Many competitors have capitalized on their inertia in adapting to the evolving market expectations.

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Meanwhile, newer brands like AVATR (formerly operating under a direct-sales model) and Rising Auto saw the lowest scores.

AVATR, in particular, struggled during the evaluation period due to a transition from direct-sales to a dealership model, and the brand’s service shortcomings during this shift became apparent.

Standard Operating Procedures

The study examined 40 basic service capability across various touchpoints during the purchase process to measure the compliance rate of Standard Operating Procedures (SOP).

The evaluation covered 40 SOPs, including store environment, customer reception, product introduction, test drive, negotiation, and follow-up.

Test drives were a key weak point, with low compliance rates for basic elements like safety briefings, route explanations, and addressing specific customer needs.

Landroads SOPs compliance rate
Source: Landroads

The average score in this category was 66.24%, well below overall SOP compliance rate mean of 83.47%.

The industry average compliance rate was 83.5%, indicating that most brands meet basic service expectations.

The highest compliance rate in this study was achieved by NIO, with a score of 92.4%. By comparison, Audi, Mercedes-Benz, and BMW scored 78.2%, 81.8%, and 85%, respectively.

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Customer Satisfaction Level

While stores generally performed well on objective measures like negotiation and product presentations, subjective customer satisfaction in these areas fell below the industry average.

Customers measured in this experiment were not fully satisfied with their in-store experiences, with an average customer satisfaction level of 70.9%.

The highest satisfaction score was again recorded by NIO at 90.9%, followed by Denza (85.9%), BYD Dynasty (84.6%), and Zeekr (84.6%).

Surprisingly, XPeng and Xiaomi scored amongst the lowest with 62.7% and 52.8%, respectively. The worst customer satisfaction level was Buick’s at 46.5%.

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Staff Professionalism

Finally, Landroads assessed service staff by posing 3-5 questions per brand to evaluate their handling of personalized and competitive queries.

Expert reviewers noted a decline in the professionalism and standardization of sales scripts, particularly among newer brands.

Brands were evaluated on how well their staff handled specific, often complex, customer inquiries.

Many sales staff appeared overly reliant on technical specs and features like safety and autonomous driving, but failed to differentiate their brand or product from competitors.

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In some cases, sales tactics even bordered on unprofessional, with negative comparisons between brands being made without substantial explanations.

This approach was seen as counterproductive, particularly in the premium segment, where personalized service and nuanced knowledge are crucial.

The average staff professionalism score was 62%, with Denza ranking 1st with 86.2%, followed by NIO (78.5%), Li Auto (75.4%), and BYD Ocean (75.4%).

Surprisingly, the lowest staff professionalism score amongst the 31 observed brands was Mercedes-Benz, with 38.5%.

The two other high-end German auto brands, BMW and Audi, performed better with 66.2% and 64.6%, respectively.

See full results:

Landroads H2-2024 Research Sales Capability
Source: Landroads