Charging ahead in China

Recently, we marked the 25^th anniversary of Abdul Latif Jameel’s entry into the Chinese automotive market. During that time, Abdul Latif Jameel Motors China has established an exceptional reputation for quality, reliability and customer service.  

We caught up with George (王恒) Wang, Country General Manager, Abdul Latif Jameel China, to discuss the business’s growth, the state of the China’ automotive market and his ambitions for the future.

Can you provide a brief background of Abdul Latif Jameel Motors in China?

It is common to see foreign automotive businesses in China these days, but it did not used to be the case.  Abdul Latif Jameel was a pioneer when it first launched in China 25 years ago.

The original plan was to setup a Toyota Authorized Service Station (TASS) to provide aftersales service for Chinese Toyota customers, as we had already been doing for many years in markets like Saudi Arabia.  The first Abdul Latif Jameel TASS in China officially opened in Chengdu on November 11, 1998, the second in Qingdao in 2000, and the third in Wuhan in 2002. 

In 2002, Toyota Motor Corporation (TMC) and First Auto Works (FAW Group) signed a significant agreement in Beijing at the Great Hall of the People, to establish a strategic and long-term cooperative relationship.  In 2003 they formed a 50:50 joint venture, FAW-Toyota Marketing and Sales, or ‘FTMS’, to step up the distribution and sale of Toyota passenger car sales in China.  Abdul Latif Jameel China saw the opportunity to support Toyota’s investment in the market by expanding its own operations and turning the three TASS sites into ‘4S’ Toyota dealerships, covering sales, service, spare parts, and survey, to cater to the growing number of Toyota owners in China. 

This was at a time when China’s automotive market was really beginning to take off as more and more models entered the market.  Tapping into this exciting growth over the past 25 years, Abdul Latif Jameel China has developed three more FTMS dealerships in Leshan, Yinchuan and Lanzhou, plus a Lexus dealership in Wuhan and another dealership in Chengdu (with Toyota’s other JV partner GTMC).  It now operates in eight locations across four provinces.

What has been Abdul Latif Jameel’s strategy in China?

There are different ways to develop dealerships.  Our current strategy has so far been to go with Toyota/Lexus only.  Abdul Latif Jameel Motors China has, in the past, declined invitations from other brands like Buick and Volkswagen in order to retain our deep relationship, award-winning focus, and mutual respect with Toyota.  TMC only chooses trusted investors to support its network expansion.  Abdul Latif Jameel Motors China’s outstanding performance over the past 25 years puts us in a strong position to maintain its partnership with TMC as it continues to grow in the market.

When did you first join Abdul Latif Jameel?

I joined Abdul Latif Jameel as a management trainee in Saudi Arabia in 1995.  I only knew a little about the business at that time.  Abdul Latif Jameel was already well known in the MENAT region, but not so much elsewhere.  Our Chairman, Mohammed Jameel, KBE, could foresee the potential in China, however, and was already planning to invest there.  As a result, the businesses were actively recruiting management trainees from China. 

I had recently completed an important R&D project as a project leader in China’s Eighth National Five-Year Plan.  As a result of this project and its exposure, I had the opportunity to visit the USA in 1992.  I was surprised with the diversity and volume of cars on the road and immediately realized the huge potential for the expansion of the private vehicle market in China.  I was already planning to study an MBA abroad as the next stage of my career development, so the Abdul Latif Jameel opportunity was perfect for me.  It gave me the chance to study business management abroad while also launching a career in the automotive industry in China.

What is the position of Abdul Latif Jameel Motors and Toyota in the Chinese market today?  How has this evolved over the years?

When Abdul Latif Jameel China started as a TASS in 1998, we hired nine Thai technicians who had previously worked in Abdul Latif Jameel Motors Saudi Arabia to provide quality assurance and deliver on-the-job-training for the first Chinese technicians.  The values they brought with them from Abdul Latif Jameel in Saudi Arabia – high quality, reliability, ‘best-in-town’, long-term strategic partners – are still the values that underpin the reputation of Abdul Latif Jameel China today. 

Recently, with the growth of new energy vehicles (NEVs) in China, the market has become even more competitive as many new NEV manufacturers have entered the market.  This has placed additional pressure on Toyota as it is not seen as being as stylish or high-tech as some of the newer domestic Chinese NEV brands, with their ever-shorter product evolution cycles.

Abdul Latif Jameel Motors China has received numerous awards and recognition for quality, customer service, etc., over the years, how have you achieved this?

From very beginning, we followed Abdul Latif Jameel’s philosophy and values: respect for our Associates, customers, business partners, and community; continuous improvement (kaizen); innovation; and empowerment. 

Respect for our Associates is one of our fundamental values.  As senior management, we don’t ask anything of our Associates that we are not prepared to do ourselves.  For example, Associates are required to greet customers when they enter the site, so every Monday morning at 8 am management also stand at the gate to greet Associates, whatever the weather.  In terms of respecting customers, we are proud to uphold Abdul Latif Jameel’s ‘guest first’ philosophy.  We encourage our Associates to go the extra mile to exceed our customers’ expectations, so they are not only satisfied, but also delighted with the service and support they receive.  As far as kaizen is concerned, by the end of 2023 we had completed more than 1,300 kaizen activities in Abdul Latif Jameel Motors China, involving more than 4,000person-times. 

I think this focus on respect for our Associates, our ‘guest first’ philosophy and our commitment to continuous improvement are the foundations of the recognition and awards we have won for quality, customer service and customer loyalty.  The most recent of these was the ‘Outstanding Dealer Group’ award we received at the FAW-Toyota Motor Sales (FTMS) annual dealer conference in Chengdu, in January 2024.  This is the highest accolade given by FTMS. 

Selected from more than 100 dealer groups with over 700 dealership outlets working with FTMS around the country, the award recognized Abdul Latif Jameel Motors China’s performance across a range of criteria, including vehicle, parts and service sales, financial performance, customer satisfaction and loyalty.

This is especially gratifying, given the difficult market conditions experienced by Toyota dealers in China in 2023.  Our Associates rose to the challenge and maintained our commitment to customers. I really appreciate our Associates’ courage, wisdom, and hard work, and would like to also thank our Associates at HQ, for their guidance and support.

Many of our customers in China are extremely loyal.  What makes them come back time and time again?

Some customers have been with us for more than 20 years; some have bought multiple vehicles from us; some have referred friends and relatives; and some have provided valuable feedback we’ve been able to implement to improve our service levels even more. 

We treat them as our friends, and I hope they see us the same way thanks to our ‘guest first’ ethos.  For example, after heavy rain, some customers’ vehicles were flooded.  Our Associates didn’t hesitate to walk into the water to help the customers.  On another occasion, our Lexus salesperson wrapped up a vehicle and sent it to the home of the customer, so they could present it to their daughter as a birthday gift.  Or there is the ‘Abdul Latif Jameel Café’ that we host every month in Chengdu.  This is when we stay open late into the evening to allow customers to bring their cars to us after they have finished work.  As well as servicing their car while they are here, we give them a delicious hot meal cooked by our chefs.  Our ‘café’ was even highlighted on a local restaurant app for the quality of the food!

How important is it for you to invest in recruiting and retaining the best people to continue your success in China?

The success of Abdul Latif Jameel China depends on the dedication of our Associates.  Every associate is fully respected, not only in terms of they are treated – with respect, friendliness consideration – but also in terms of their career development within Abdul Latif Jameel.  We arrange systematic training to help them develop their careers and we provide new employee training to help them get to know the Abdul Latif Jameel way and how we expect them to behave. 

This includes The Jameel Principles, The Toyota Way and specific pre-job and on the job training. 

Associates always receive guidance and feedback from their direct line manager, who acts as their mentor.  Salespeople, service advisors, technicians and dealership management receive professional training from the OEM and primary distributors. 

When vacancies arise, we always try and promote from within where possible.  All the current management at Abdul Latif Jameel China have developed in this way.  Our Associates really are considered ‘family’, based on 25 years of mutual respect, trust and responsibility.

How does the Chinese market differ from markets in the Middle East or Europe?

China is the biggest car market in the world and total passenger car sales reached 22 million units in 2023.  The NEV market is developing extremely fast, with sales reaching 36% penetration and 36% year-on-year growth in 2023.  

Chinese brands – especially new brands – are very strong in their NEV offer, while legacy international brands, at the moment at least, have a weaker NEV proposition, so the market share of Chinese brands is increasing and overtaking international brands. 

China is a huge country, with 9.6 million square km and a 1.4 billion population across 34 provincial-level provinces and numerous cities.  Each province or city has its own regulations, for example, there is a limit on the number of internal combustion engine (ICE) registrations in Shanghai, but no limit for NEVs, which has helped to drive NEVs to a 49% market share in the city.

How hard is it for non-Chinese brands to be successful in China?

Toyota/Lexus along with other non-Chinese brands have been negatively affected by the shrinking ICE market because their current NEV portfolios are currently not as strong.  This has led to an incredibly competitive market and significant downwards pressure on prices.  In the short term, distributors need to subsidize dealers to maintain their success.  In the longer term, non-Chinese brands must speed up the development of their NEV propositions and close the gap in this market.  Toyota has already set up an electric vehicle R&D Centre in Changshu, for example, which should help deliver longer term success in the market.

What trends and developments are driving change in the Chinese mobility market?

The plug-in hybrid electric vehicles (PHEV) market in China expanded by 83% in 2023, while electric vehicles (EVs) grew by 21%.  This suggests that an increasing number of customers are preferring PHEVs to EVs.  Smart cars and autonomous vehicles, which bring a totally new driving experience, are also becoming a very hot selling point, and I’m sure this market will also experience further growth over the coming years.

Is the market ready for further growth in electric vehicles, in terms of infrastructure or government support, for example?

The Chinese government has done a lot to support NEVs in terms of both subsidies and infrastructure, such as charging points.  However, cash subsidies for NEVs came to an end in 2023 and purchase tax deduction will decrease from 2023, completely stopping by 2027.  

Instead, the momentum behind NEVs has shifted from government support to customer preference.  As long as the superior customer experience with NEVs continues, especially with features like intelligent functions, they will never come back to ICE.  NEVs will continue to grow, and PHEVs will grow faster than EVs because there is no range anxiety with a PHEV.

What are you plans for further growth of Abdul Latif Jameel Motors?

We are ready for further growth!  With 25 years’ experience in China, the strong reputation Abdul Latif Jameel China has earned over that time, the trust of more than 270,000 customers (and growing!), and a professional, dedicated, and loyal Chinese team, we look forward to continuing our partnership with Toyota and Lexus, as we explore new business opportunities and strive for an even better next 25 years.

What does the future hold for the automotive market in China?

Total vehicle sales exceeded 30 million units (including 5.2 million export) in 2023.  Both domestic and foreign markets have room for further growth.  Some experts forecast sales of 40 million units in the near future. 

At the same time, we expect to see further consolidation in the market.  There are roughly 90 Chinese brands in the NEV market and competition is fierce.  Wima and Skyline went bankrupt last year, for example, while Hiphi stopped production and sales at the beginning of 2023.  More will follow and only the strongest brands will survive for the longer term.

For Abdul Latif Jameel, our partnership with Chinese brands outside China has already begun with the appointment of Jameel Motors Morocco as the distributor for MG Motor (a SAIC brand), Jameel Motors Egypt as the distributor for GAC Motor and also with BYD in Türkiye – so the future looks very bright.