Recently, Nanfang Daily · Pazhou π conducted an exclusive interview with Zeng Wan Gui, Chairman and Founder of Baturu, on the digitalization path of the automotive aftermarket industry. The following is the content of the interview.

Reported by | Nanfang Daily · Pazhou π reporter Wang Shiqi

Guide

With the advent of the digital economy era, the automotive industry has ushered in new opportunities for digital development. As an important link in the automotive industry chain, accelerating the digital transformation of the automotive aftermarket has become particularly crucial.

From the perspective of market size, the automotive aftermarket holds enormous development prospects. As of the end of March 2023, the national vehicle population reached 420 million, with 320 million automobiles, ranking first in the world.

In 2022, the scale of China's automotive aftermarket industry has exceeded 1.3 trillion yuan. It is expected that by 2025, the market size for automotive maintenance and care services will reach 1.7 trillion yuan. However, the automotive aftermarket still faces issues such as high fragmentation, irregular competition, slow improvement in industry efficiency, inconsistent service standards, and low awareness and trust of consumers towards aftermarket service companies.

How to empower the automotive aftermarket industry chain through digitalization, improve transaction efficiency, and drive upgrades in business management?

In 2013, Zeng Wan Gui, who came from the traditional auto parts industry, founded Guangzhou Baturu Information Technology Co., Ltd., embarking on a path of advancing industrial internet to tap into the value of industry chain services.

Through nearly ten years of development, Baturu's procurement digital solutions have deeply served multiple top 100 automotive dealer groups, maintenance chains, mobility platforms, and other large enterprise clients with auto parts procurement management needs, as well as 100,000 maintenance companies. At the same time, it has connected and served the digital upgrades of over 2,000 upstream auto parts factories and distributors, thereby achieving efficient matching of industry supply and demand and improving industry efficiency.

In recent years, Baturu has continuously been listed among Guangzhou's "Unicorn" innovative enterprises and China's "Unicorn" enterprises, and has been selected as one of Deloitte's Top 20 High-Tech High-Growth Enterprises in Guangzhou. In 2018, Baturu completed a C-round financing of USD 100 million, which was the largest single investment for an automotive aftermarket supply chain company at that time. To date, Baturu has completed five rounds of financing, gaining recognition from domestic and international capitals such as Warburg Pincus, China Renaissance, CICC Capital, and Yuexiu Capital.

“1%” is both a problem and an opportunity

Providing full vehicle parts supply chain services for upstream and downstream of the industry

Data shows that there are over 400,000 repair shops and 400,000 auto parts dealers nationwide, yet no auto parts distributor has a market share exceeding 1%. In Zeng Wan Gui's view,this “1%” is a problem as well as an opportunity.

“With the increase in vehicle ownership, the number of repair shops has also grown. At the same time, due to the high reliance on professional talents in the automotive aftermarket, the management radius of suppliers is not very large, so the number is also relatively high. Given the relatively dispersed industry distribution, strengthening industry intensification and improving product circulation efficiency through the internet becomes even more important. This is the general trend of industry development and also Baturu's opportunity.”

As a veteran with over twenty years in the traditional auto parts industry, in 2013, Zeng Wan Gui quickly seized the opportunity of industrial internet development and founded Baturu.

From 2013 to 2019, around the full vehicle parts trading platform “Auto Parts Shop”,Baturu established a closed-loop system from online transactions to offline fulfillment and delivery services,providing full vehicle parts supply chain services for upstream and downstream of the industry.

“Similar to JD.com's self-operated model, in the first phase, we built a self-operated full vehicle parts supply chain platform. The parts database, systems, and supply chain capabilities accumulated on this basis laid the foundation for subsequent platformization.”

In 2020, Baturu upgraded its partner model to a franchisee model, providing franchisees with full vehicle parts supply chain + systems + operational empowerment, fully unleashing their flexibility and autonomy as service providers, while strictly controlling fulfillment and delivery. In addition, it began piloting the “SaaS+” model for end customers to assist in the digitalization of their internal business management.

Establishing parts data standards

Demand chain data empowers intelligent manufacturing

In Zeng Wan Gui's view, one of the important reasons why consumer internet was able to rise rapidly is that it mainly targets the C-end, with relatively low cognitive and participation thresholds, making it easier for capital, technology, etc., to intervene, and also easier to standardize and reconstruct.But industrial internet is not like that.

For example, industries such as automotive aftermarket, MRO, and building materials all exhibit characteristics of large scale, fragmentation, and low circulation efficiency, with high cognitive barriers for both buyers and sellers, plus long circulation chains and heavy service attributes, sothey are not easy to standardize and reconstruct.

“In doing industrial internet for the automotive aftermarket, the first step we took was standardization. This is a very important logic in the industry.”

Datafication of the automotive aftermarket is the first step and also the most difficult one.Because in the Chinese automotive market known as the “land of myriad cars,” even repair shop employees may not fully recognize every car model or know the specific models of each part.

“Repair shop people might say: I want to buy a headlight for an Audi A6. But in our view, this demand is very inaccurate. Because Audi A6 is a car series, different years have different model years, and configurations vary. So ‘Audi A6 headlight’ is a linguistic description; we need to convert it into a mathematical description.” Zeng Wan Gui further explained that the vehicle model is the smallest granularity of a car, and different models mean different parts.Parts data standardization means using numbers to correspond to models, parts, and names, giving parts a “digital ID”.

Just the work of standardizing automotive parts data has been ongoing at Baturu for five years. During this period, the database needs to be continuously updated after each new model is released. However, after parts data standardization, it still cannot fully lock in a specific part for trading. After matching information such as size, model, and specifications, it also needs to match product information in dimensions like unit price, origin, brand, after-sales, and quality.

Zeng Wan Gui said that before platformization, procurement mainly relied on “trust.” “Repair shops are very dependent on some long-term suppliers; whatever the supplier recommends, the repair shop buys, without paying much attention to brand and manufacturer.” However, this trust-based procurement has low efficiency and cannot guarantee stable product quality.

After product information standardization, customers can place orders and conduct self-service transactions on Baturu's platform. Moreover, from the time the customer issues a demand to the completion of the entire transaction fulfillment, every node leaves a data record. The data from the demand chain, after accumulation, can serve as a reference for production planning, empower intelligent manufacturing, and drive the digitalization process of the entire industry.

It is understood that currently, Baturu's automotive parts database covers over 100 car brands, more than 200,000 mainstream models, achieving over 500 million parts matching relationships, covering 99% of mainstream models, with a platform parts data accuracy rate of 99.98%.

Digital solutions

Auto parts procurement management costs reduced by over 10%

In 2021, Baturu began providing customers with overall digital solutions based on “data + systems + supply chain + operational capabilities”, committed to building an open digital infrastructure platform, and quickly entering from parts procurement digitalization.

For example, for some companies engaged in used car trading, which handle a wide variety of models and have large procurement demands, there is a need to establish their own supply chain management system.

Baturu can use its own database, system tools, supply chain resources, and operational capabilities to help customers build an efficiently operated supply chain management system. Compared to the traditional auto dealer parts procurement management model, Baturu's auto parts procurement digital solution can improve efficiency by 30% and reduce costs by over 10%.

Currently, in terms of revenue, the proportion of Baturu's supply chain business and SaaS digital solutions business is 7:3; in terms of transaction scale, the proportion is 3:7. “The transaction scale brought by SaaS services as an entry point is still quite large in magnitude.”

Facing the challenges of future enterprise development, Zeng Wan Gui frankly stated that whether overall digital solutions can gain a larger market depends on whether the industry's cognition of digitalization can rapidly improve. The pandemic has objectively accelerated the digital transformation of upstream and downstream enterprises in the industry chain and the upgrade of business management.

Warehouse and distribution logistics efficiency control and co-building service provider network with mid- and upstream of the industry

The ultimate goal of industry digitalization is to improve circulation efficiency and let end customers have a better consumption experience. If the industry vision is narrowed to a finer granularity—transaction fulfillment experience, how does Baturu control warehouse and distribution logistics efficiency?

Zeng Wan Gui said that auto parts trading has high service requirements, often accompanied by offline delivery, technical installation, and other after-sales services. Baturu initially completed offline delivery through its self-built full vehicle parts smart central warehouse + dedicated trunk logistics and “last mile” franchisee network. Now it is gradually co-building a service provider network with mid- and upstream industry partners to improve fulfillment efficiency, which fully embodies the collaborative effect of industrial internet.

Compared to traditional fuel vehicles, the structures of new energy vehicles and intelligent connected vehicles have achieved some disruptions. Will this bring changes and challenges to automotive aftermarket services?

Zeng Wan Gui said that whether fuel vehicles or new energy vehicles, parts may change, but the direction of maintenance needs remains unchanged, and the logic of supply chain services also remains the same. At the same time, the ownership of new energy vehicles has not yet reached a large scale, and there are many personalized customized parts, so the service costs in the automotive aftermarket will increase accordingly. However, overall, the increase in vehicle ownership is beneficial to automotive aftermarket companies, as it means more demand.

Pazhou π is a talent information theme brand jointly created by Haizhu District Committee Talent Office, Pazhou Subdistrict Party and Workers' Committee, and Nanfang Metropolis Daily. Based in Pazhou, facing the Greater Bay Area, focusing on the deeds of innovative and influential outstanding talents in Haizhu District, providing readers with the latest frontier dynamics in artificial intelligence and digital economic development.