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FAW-VW launched NEW JETTA: far from a threat to independent automakers

From:Internet Info Agency 2019-03-08 10:50:09

After the Spring Festival, the hot topic in Chinese auto market is undoubtedly the launch of Volkswagen's first sub-brand. On February 26th, the JETTA brand was born in Wolfsburg, Germany, and then introduced by FAW-Volkswagen. This marks the official entry of the JETTA brand that has been planned for many years. From the perspective of consumer perception, the new brand name "JETTA" is a continuation of emotions. For companies, the Jetta brand is more like FAW-Volkswagen's internal commando: a fundamental change for the cognitive needs of Chinese users, to activate the hematopoietic system to supplement fresh blood.

 “China, China, China, important things need to be said three times.” This is what Herbert Diess, chairman of the VW Group Management Board and chairman of the VW Passenger Vehicle Brand Management Board, insisted when he visited China in the first working day of 2019. A month later, the JETTA brand was released. What kind of signal does the new brand represent? And whether it will affect the living space of independent automakers. All of these still need to be found.

1. Not only for China, but for the youth

As early as 2002, Toyota Group launched a new brand, SCION for the North American market. Unlike the traditional image of Toyota, SCION adopted a new brand marketing, focusing on young consumers and customized services, and became popular with local users. Many consumers did not even know that the SCION brand belonged to Toyota Motor at the beginning. This became a classic case of brand marketing at that time.

Today, the third brand of FAW-Volkswagen launched by Volkswagen Group has similar settings with Toyota SCION in some respects. Firstly, the brand targets the younger generation of consumers. Secondly, the brand uses the new pricing system for the first time, with a price range of 70k-120k yuan. Although the new model does not have the classic logo of Volkswagen, relying on the strong background of the brand, consumers still have great confidence in it.

It is the first attempt by FAW-Volkswagen to upgrade a classic model to a separate brand. However, this "Jetta" is not the original Jetta. In terms of positioning, the new brand is aimed at young users. It is no longer presented with the original image of a traditional family car. In terms of product design and promotion slogans, it focuses on young users mostly. And the brand new sales channel has been activated.

In addition, the new sub-brand is dominated by the Volkswagen Group and based on global production standards. The investment from personnel to capital is not in the same order of magnitude as the original single model. In my opinion, the Jetta brand has actually broken the original consumer's perception of the name, which should be considered as a cognitive upgrade process. In essence, the Jetta brand is all new and has no actual connection with the original model. It is a new attempt of Volkswagen worldwide.

2. Is the market share of independent automakers threatened? Far from it.

The new models are priced at less than 100,000 yuan, and the three models that were put into production in advance are two SUVs and one sedan. The above information was interpreted by many media as "the wolf is really coming", so whether the new Volkswagen brand will affect the market share of independent automakers, how big is the impact? Is this the case? Let's talk about three points.

(1)  At present, the guide price of FAW-Volkswagen's Jetta models is 81,100-108,80 yuan. After visiting some FAW-Volkswagen dealers, IIA learned that the price of Jetta's models is about 20,000 yuan. The actual price range has become 60k-80k yuan. Competition with independent automakers has always existed, and this is not the first time that Volkswagen had a low pricing.

According to the data provided by CPCA, the annual retail volume of the FAW-Volkswagen Jetta models is 326,623 units in 2018. If the annual production capacity of the new brand is 300,000 units (A SUV capacity is 75,000 units/year, A+SUV capacity is 150,000 vehicles/year, A SH sedan has a capacity of 75,000 vehicles per year.), which is close to the existing number of Jetta models. Between "winning with lower price" and “taking a new brand image”, FAW-Volkswagen has already made a decision a few years ago.

(2) Compared with the independent automakers, JETTA relies on VOLKSWAGEN's huge system in terms of brand operation and premium. In addition to maintaining the same volume, independent brands should enhance their own strength and provide better products. In fact, SAIC GM Baojun’s positioning has always been in this range. After the release of the JETTA brand, there may be other joint venture brands to follow and further lower the price range, which is a driving force for independent brands. The evolution of brand value and price/performance advantage still have to be continued.

(3) Earlier, some media reported that the Jetta model will be discontinued. If this is the case, the market vacancy will appear after the Jetta stopping production, and the first model of the new brand is expected to be listed in the middle of the year. The gap period that to occurr during the previous capacity growth process will still take some time. The launch of the new Sagitar will gradually fill the gap, but whether the Sagitar model will lower the price or wait for the new brand to grow, this is a question for FAW-Volkswagen. At the same time, it is also a question for consumers: waiting for the new brand model, or continue to purchase the VOLKSWAGEN brand model? This may be "sweet troubles." However, from the long-term construction of the FAW-Volkswagen branding, this is a process that needs to be experienced. It is necessary to adapt to the values of the new generation of users born in the 90s and 00s. It is said that Jetta is a product that is consistent with its own values, not just a traditional family car. How to make users accept new brands is a problem that needs to be faced and an opportunity for independent brands.

3. Upgrade of FAW-VW’s manufacturing system

The JETTA brand released in Germany is the first sub-brand of the Volkswagen brand and has great strategic significance. From production to construction, this new brand is implemented in accordance with the VW Group's unified standards. According to the information released by the Volkswagen Group, the new brand models will be produced by FAW-Volkswagen Chengdu Branch: it will be built based on German Volkswagen's globally consistent process and quality assurance system, gather the global resources of VW, and adopt the strict Audi special test around the Konzern production system.

In my opinion, VOLKSWAGEN's thinking about youthfulness is worth studying. Dong Xiuhui, deputy general manager of FAW-Volkswagen Automotive Co., Ltd. and general manager of FAW-Volkswagen Sales Co., Ltd., said: "JETTA will have a new marketing service system and an independent marketing network. We will cooperate with some investors who have been working with FAW-Volkswagen for many years tp quickly build more than 200 dealer networks throughout the country. In addition, based on sales experience stores, 2S stores, 4S stores, and combined with the mobile network model, Jetta brand will further improve the speed and density of network layout. At the same time, we will work hard to provide consumers with a diverse, convenient and comfortable terminal experience, closer to customers."

Jürgen Stackmann, member of the Volkswagen Passenger Vehicle Brand Management Board and head of Volkswagen's passenger car brand sales and marketing, also said: "If there is a model in China that could become a independent brand, it is Jetta. Now, Jetta has become Volkswagen's first independent brand that originated from a model. In the future, when users decide to buy a Jetta brand, they will not only get a car, but also the commitment to quality from VOLKSWAGEN."

In the end: Obviously, the Jetta brand is already thinking about the needs of a new generation of consumers. The sales network is more personalized and has more youthful elements. It is a cognitive upgrade that the new brand brings to consumers. Many people think that the Jetta brand has a greater impact on independent automakers. From the branding to the future capacity layout, it is still far from that. For the thinking and positioning of young users' consumption choices and further enhancing brand value, there is a long way for independent automakers.

Editor:Yu Ning