The "long warranty" policy has hit the profit margins of commercial vehicle manufacturers, sparking a nationwide "anti-price war" in the domestic market. Recently, Foton Motor launched a nationwide "Worry-Free" service campaign, offering a 200,000 km warranty on key components for its Auman, Ao Ling, Landscape, and Sapu models. This move has stirred up strong reactions within the industry, with many believing that Foton is using its size and strength to create a "price edge," putting pressure on smaller competitors. Some companies have even called for government intervention, warning that this could trigger a destructive price war similar to what happened in the home appliance sector.
The question now is: Is Foton Motor positioning itself as the "price killer" in the light truck segment? According to Foton's announcement, customers who purchase its products between June 15th and September 15th will enjoy up to 39 key parts covered under a 200,000 km warranty, along with free maintenance. This has raised concerns about triggering a price war.
According to Jia Xinguang, a senior automotive critic, such a long warranty period for trucks is unprecedented in China. Commercial vehicles, being tools of production, are more prone to wear and tear than passenger cars. Typically, domestic trucks come with a warranty of around 100,000 km. Extending it to 200,000 km would significantly increase maintenance costs, making it difficult for companies to sustain. Despite consumer demand for longer warranties aligned with international standards, most domestic manufacturers have been slow to act.
A veteran truck driver estimates that after 100,000 km, the cost of repairs for a light truck could range from 8,000 to 12,000 yuan, with heavier trucks costing even more. By extending the warranty to 200,000 km and offering free maintenance, Foton is essentially providing a discount of over 10,000 yuan, which is a significant blow to profits. This is seen as a "profit-for-market" strategy, aimed at gaining a competitive edge.
A manager from a light truck manufacturer bluntly stated that Foton’s long warranty directly impacts profit margins. With such a model, many small and medium-sized commercial vehicle companies may struggle to remain profitable. Foton is now acting as the "price killer" in the industry.
Analysts warn that the current truck market has already entered a phase of decline, especially after last year's sales slump. Many truck models have started cutting prices to maintain competitiveness. Now, with Foton's extended warranty, the pressure on the industry's profits is mounting. The company is not just competing on product quality but also on service standards, forcing competitors to either match or fall behind.
Dealers have felt the impact most acutely. One Foton dealer reported that customer inquiries doubled after the launch of the long warranty. Another dealer, representing a different brand, has urged their manufacturer to extend warranties or improve other services to stay competitive.
A well-known commercial vehicle manufacturer expressed concern that if Foton continues selling with ultra-low profits, it could spark a price war, leading to a cycle of vicious competition. They believe the government should step in to prevent such behavior.
However, Foton Motor’s Deputy General Manager of Marketing, Song Tianshan, strongly denied these allegations. He argued that the long warranty is not an attempt to undermine competitors but rather a result of improved product quality. Foton has partnered with global leaders like Cummins, Weichai, Bosch, and AVL to bring advanced technologies into its products. This, he claims, justifies the long warranty as part of its commitment to international standards.
Song also welcomed regulatory oversight to ensure Foton isn’t engaging in unfair competition. He emphasized that the company has a vast service network, which helps reduce maintenance costs, and its strong sales performance ensures profitability even with slightly reduced margins. Claims of "price wars" and "vicious competition" are, according to him, baseless and driven by competitors' inability to keep up with Foton's innovations.
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