Zung Fu Gears Up for Auto Revolution

A more customer-centric approach is the focus for Zung Fu as it rises to the challenges being brought about by the impact of disruptive technologies on the global automotive industry.

It is predicted that the industry will experience more disruption in the next decade than it has in the last 50 years driven by four main areas of change, often summarized by the acronym CASE – Connectivity, Autonomous driving, Shared and Services and Electric cars. Together these are changing the whole automotive landscape and how the industry deals with manufacturing, data analytics and value chains, in particular, the customer experience.

As the exclusive retailer of Mercedes-Benz cars in Hong Kong and Macau, with one of the highest market shares for Mercedes-Benz worldwide, and an expanding presence across Southern and Western China, Zung Fu is exploring how it can

Perspective

best respond to these fast-moving developments and use new technologies to re-define customer interface and provide an inspiring and excellent customer journey.

Not surprisingly, Mercedes-Benz and parent company Daimler AG are playing a leading role in this automotive ‘revolution’ taking connectivity to a new dimension in comfort, safety, and entertainment, pioneering autonomous driving, addressing the mobility of the future with a broad range of intelligent, flexible-use services, and introducing the Mercedes-Benz ‘EQ’ (Electric Intelligence) brand.

“Connected, Autonomous, Shared, Electric: Each of these has the power to turn our entire industry upside down,” said Zung Fu Chief Executive Ben Birks, “but the biggest challenge for Zung Fu is combining them into a comprehensive, hassle-free package, which offers our customers a notably more enjoyable, transparent and convenient usership experience.”

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C - Connected

S - Shared

By 2020, 100% new cars in US, EU and China will be ‘connected’.

The connected car is able to communicate and interact between cars or with traffic management infrastructure.

Global vehicle sales growth will be dampened by shared mobility

but not halted.

A - AutonomousNearly and fully autonomous vehicles

to grow to 80 million in 2030.

E - ElectricGlobal forecast of electric vehicle sales

in the US, EU and China.

2017 2030

1 million

02018 2030

80 million

Driving Ahead in Hong KongIn Hong Kong and Macau, where Zung Fu has two new brand centres, the Kowloon Autohaus in Hung Hom, opened in 2017, and Island Autohaus in Chai Wan, due to open in late 2018, and one showroom and service centre in Macau, the company is increasingly using technology and data analytics to tailor and personalize both the buying and owning experiences for customers.

“We need to understand all of our customers’ individual needs and their behaviour if we are to maintain our competitive advantage,” explained Zung Fu Managing Director, Hong Kong Aaron Lee.

With customer segmentation, Zung Fu is able to gain a deeper understanding of customers’ preferences, and maximize cross and up-selling opportunities in areas such as aftersales services, finance, insurance, used car sales, and car accessories. For example, customers who have serviced and insured their cars with Zung Fu over periods of at least two years are being offered rewards including extended warranty on the repair and parts replacement costs of key components.

Data is gathered from customers on purchase of a vehicle and through regular surveys by Zung Fu’s marketing team and Business Development Centre. By focussing on key points such as their driving pattern, brand preference and interests it helps to build customer profiles. Subsequent special events, including live viewing of an F1 Grand Prix for sports car enthusiasts at Zung Fu’s Mercedes Me venue in Central and a test drive at Disneyland for customers with families, also aid Zung Fu in providing personalized service.

“Moving forward, we plan to develop a single view Customer Relationship Management system to further consolidate and refine customer data and introduce a comprehensive loyalty member programme to reward and serve our customers better,” added Mr Lee.

Customer convenience is another important element of the customer journey. Last year, Zung Fu introduced an online system for its aftersales services, which allows customers to book their service anytime, anywhere and get real-time confirmation. In its first three months, 600 customers registered. A new courtesy car on demand service where customers can drop off their car at a Zung Fu service centre and then continue on their way with minimum fuss has also proved popular, along with Zung Fu’s guarantee of a same day return for cars undergoing a regular maintenance service. Most recently, Zung Fu is exploring a premium ‘Drop & Fly’ service where rather than leaving their car at the airport, customers would drop it off to Zung Fu staff at an airport hotel. While they were away, the car would be serviced and then ready for pick up at the same location on their return.

“This hassle free experience means that customers would be travelling in style, would not have to spend valuable time having their car serviced and would return from their trip to a finely detailed and waxed car,” said Director of Aftersales Samson Cheng.

Automotive Trends

44 million

2015 2030

87 m

illion

115 million

Sources: Figures extracted from the reports of PwC and McKinsey.

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Leading the WorldDuring the more than 60 years since its establishment in Hong Kong, Zung Fu has had a strong brand presence, continually raising the standards of the vehicle ownership experience with its contemporary showrooms.

Last year, Zung Fu became the first Mercedes-Benz dealer in the world to incorporate the new MAR 2020 Autohaus design, when it completely refreshed and modernized its Kowloon Autohaus in Hung Hom. With the focus on personal interaction and physical product experience, the upgraded facilities include a larger showroom, new reception setup and a new lounge where customers can relax, enjoy the services of a bistro café and interact with the latest digital tools.

“The MAR 2020 Autohaus concept gives a thorough insight into the future world of experience when the showroom becomes a stage,” explained Ben Birks. “A focal point of the new brand presence is the amalgamation of the analogue and digital world. Customers are experiencing a new level of quality at the point of sale through a combination of spatial design, innovative advisory processes and the introduction of digitalization in advice, sales and service.”

New job profiles for sales personnel ensure that increasing product complexity and digitization are taken into account, as well as the individual needs of customers. For example, Star Assistants are now the first point of contact for a customer at a showroom’s reception where they clarify a customer’s needs and then immediately forward them to the appropriate person for advice, or a service or sales conversation. Product Experts explain the special features of vehicle models and their technologies directly on the vehicle or on digital devices and screens to interested parties.

All this and more will be available later this year when Zung Fu unveils Hong Kong’s largest Autohaus, on the Eastern Harbour waterfront in Chai Wan. The nine-storey 4S (Sale, Spare parts, Service and Survey) MAR 2020 flagship store will incorporate a showroom, office, aftersales service workshops, used car display, enormous event space, bistro café and customer training centre.

“Both the Hung Hom and new Chai Wan autohauses reflect the shift in our industry from a rational, transactional relationship to relational bonding. They offer more opportunities to engage with our customers, to get to know them better, to offer a more personalized service and to be their true partner on the road,” said Mr Birks.

In 2017, Zung Fu became the first Mercedes-Benz dealer in the world to incorporate the new MAR 2020 Autohaus design when it modernized its Kowloon Autohaus.

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Setting the Pace in China China is embracing innovation and the elements of CASE at a fast and impressive pace. In the markets across Southern and Western China where Zung Fu now has 31 Mercedes-Benz outlets, including 21 4S full-service dealers, seven showrooms and three service workshops, the company is well placed to respond to the changing role of the car in people’s lives.

“Research shows that millennials, who will make up 30% of China’s total population by 2025, are ready to embrace a digital auto life,” said Zung Fu China Managing Director Elton Chan. “Ninety per cent of this group start their car research by browsing online and 61% feel digital elements give a premium feel when they visit a showroom.”

On its path towards a new mindset and business model, Zung Fu China is determined to become customer ‘obsessed’ and to use digital technology and innovation to provide customers with a seamless experience in their online research, dealer visits, vehicle purchases and aftersales services.

Several key projects are already underway to improve the customer journey and deliver an enjoyable, transparent and convenient experience. In the ‘enjoyable’ category, e-gaming, which has become hugely popular in China, is being installed in the customer waiting zones of several dealerships in the first half of this year.

In the ‘transparent’ area, an internet-based B1 platform for the used car business was launched in January in the form of an App, known as Da Feng Che. The app includes internal management and market information, and multiple functions from stock management to quotation and evaluation.

The roll out of WeChat Pay across all Zung Fu China’s Mercedes-Benz outlets last year offers considerable convenience to end-consumers.

“Sometimes innovation comes in the form of answering a simple question – ‘How can we do things better?’” explained Zung Fu Group Finance General Manager Wilman Chong, who is responsible for the WeChat Pay initiative. “We can apply current technology to ideas for eliminating any friction during the customer journey while rationalizing use of resources at the backend.”

Also in the ‘convenience’ category, Zung Fu has repackaged its aftersales services to make them more attractive and raise customer retention rates. Improvements in maintenance, insurance and downstream businesses such as accessories and car spa have contributed to a significant increase in penetration, with more existing and new car owners buying aftersales packages.

Another innovation being introduced to aid customer convenience is an auto gate smart connection, which is being launched in all Zung Fu China dealerships in the second quarter of 2018. This will include automatic passing management with number plate scanning.

Zung Fu China is determined to become

customer ‘obsessed’ and to use digital

technology and innovation to provide customers with

a seamless experience in their online research,

dealer visits, vehicle purchases and

aftersales services.

Research shows that millennials, who will make up almost a third of China’s total population by 2025, are ready to embrace a digital auto life.

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Keeping UpOne of the major challenges for the auto industry is keeping up with the speed of change being brought about by disruptive technology. Traditional viewpoints and business models have to make way for new ones along with the impact of new technologies, and vehicles that are increasingly becoming ‘computers on wheels’.

When the Hong Kong Government waived first registration tax for electric cars, over 2,000 new electric vehicles were registered during a nine-month period in 2016. Since the incentive was axed in 2017, that number has dropped significantly while the registration of gasoline and diesel-powered vehicles has picked up considerably. It remains to be seen if the latest policy unveiled in the 2018 budget, which includes a HK$250,000 (US$32,000) electric car tax concession for eligible drivers who scrap old vehicles, will help to boost the numbers of electric vehicles on Hong Kong’s roads, and how big a role Government policy plays in altering the trend.

The situation is different in China where, according to Forbes, nearly one in every 50 automobiles sold there last year was an electric car, a strong indication of its rapid move towards an all-electric future. The impact of this on the auto industry is immense, especially when combined with the development and implementation of new mobility technologies in the nation’s megacities and the prediction that two out of three millennials in China will live in cities by 2025.

During 2018, Zung Fu will increase its electric vehicle outlets in mainland China from three to six and in 2019, both China and Hong Kong will welcome several new Mercedes-Benz electric vehicle models, including the new GLC EQ model.

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We are excited about the future and committed to embracing all

the elements of CASE as we further enhance the customer experience.

Zung Fu Chief Executive

Ben Birks

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Zung Fu Car-Sharing Gathers Momentum

One of the winning ideas to gain funding in the first Innovate Jardines Challenge on the Group’s motor dealerships is already in operation and gathering momentum. The closed online car-sharing platform has been developed by a team from Zung Fu China and is being piloted at six outlets in Shenzhen with plans to extend the ready-to-go business model to other dealerships across the Zung Fu network.

By paying a fee, Zung Fu customers can enjoy driving a Mercedes-Benz model, while by sharing their cars, other Zung Fu customers are able to receive monetary rewards.

“Creating a sharing community exclusively for Zung Fu customers has many benefits,” explained Head of Business and Retail Development Maureen Lu. “It gives them access to the whole range of Mercedes-Benz vehicles and options to drive a vehicle in cities across the Zung Fu network, while it also makes better utilization of idle vehicles and generates revenue.”

Typical use of the car-sharing platform, which operates via WeChat, includes booking a larger vehicle for weekend use, test driving over a longer period to help with a purchase decision, and meeting mobility needs when a car is in for repair.

“We hope car-sharing will enhance customer loyalty and promote Zung Fu brand value,” said Ms Lu. “In the longer-term, we also hope that it will inspire new journeys with new business partners and a spirit of innovation in Zung Fu China.”

As current global trends continue to reflect the move away from traditional car ownership, mobility solutions such as robo cars, which could be fully integrated into a city’s infrastructure, are being explored and considered. While that may be some way off, other trends such as access to cars on demand through part or subscription ownership, ride-sharing services, car leasing and pay per use are already becoming a reality in many cities around the world. Zung Fu is in the process of exploring co-operation opportunities with online players in the mainland China market in the form of partnership and investment, and is also planning to establish its own fleet services in the near future.

As the role of the traditional 4S dealer is forced to substantially change, the challenge for companies like Zung Fu is to ensure that it is its customers that benefit most, and to continue to expand its customer base. Incentives such as the Agility Special Promotion package launched by Zung Fu two years ago are designed to make buying and owning cars more appealing, while the company’s close relationship with Mercedes-Benz, not only in car sales but also in providing financial services, allows it to ride on schemes provided by Mercedes-Benz Financial Services (MBFS), and work with MBFS to refine and upgrade existing programmes.

“We are excited about the future and committed to embracing all the elements of CASE as we further enhance the customer experience,” said Ben Birks. “We recognize that Zung Fu needs to be constantly alert and agile, anticipate better and be ready to change to remain close to our customers. We want people to buy cars, and better use their cars because of us. In that way, we will continue to stand out from our competitors,” he concluded.

Contemporary showrooms such as this one in Zunyi, China play a key role in Zung Fu’s drive to provide an inspiring and excellent customer journey.

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