As of the outset of 2024, the battleground for new energy vehicles has grown increasingly intense. In this highly scrutinized market, under the spotlight, the appearance of anyone on stage seems almost routine to the audience. It’s no longer surprising who enters the fray of car manufacturing, nor is it uncommon for someone to suddenly exit, leaving chaos in their wake. Spectators enjoy the show, while users who stumble upon pitfalls lament their luck.
This phenomenon is not hard to grasp. The new energy sector is still in its early stages of development, primarily driven by product innovation, with many newcomers being traditional automakers lacking a comprehensive industry ecosystem. Even those who attempt to establish their own service networks find themselves struggling to keep pace.
However, user preferences have evolved. Demand from the lower-tier market is emerging, with an increasing emphasis on upgrading rather than initial purchases. Some automakers have seized upon this shift. Recently, the frenzy of car giveaways by JD.com (also known as JD, or Jingdong), a move that has sparked speculation within the industry, gradually unveils the veil of mystery surrounding its strategic blueprint.
On March 16, the head of JD Auto appeared at the 2024 summit for China EV100 and systematically outlined JD’s automotive strategy—not as a car manufacturer, but as an ecosystem builder focusing on the entire lifecycle of car ownership. It was announced that JD, in collaboration with various brands, will invest RMB 500 million (USD 69.1 million) in subsidies to facilitate vehicle replacements.
Furthermore, JD Auto will launch a tire replacement program in collaboration with numerous associations and brands, starting from this year’s tire shopping festival. Additionally, a strategic partnership with BYD was unveiled, focusing on the comprehensive construction of automotive omnichannel marketing and after-sales service systems.
Once regarded as an outlier, JD Auto is now making a distinct impression.
How customers have changed
The landscape of NEVs has undergone significant transformation. The emergence of numerous players has shattered the stereotypical image of “old-fashioned electric cars,” positioning them as a new growth pillar in the automotive industry. However, this does not imply maturity for NEVs. As users and markets embrace their emergence, competition intensifies, resulting in a crowded race.
With both traditional and new automakers vying for dominance, the market is flooded with a diverse array of products. This abundance tests the alignment between manufacturers’ capabilities and evolving user demands.
As products evolve, so do users. User attitudes toward NEVs have shifted from controversy to novelty, and now to accepting them as a viable option. Demand is rising for enhanced driving experiences and value-added services, with features such as large screens and smart capabilities now becoming industry standards.
From first-time buyers, customers are shifting toward vehicle upgrades and replacements. JD Auto’s data indicates that in 2023, 55% of vehicle purchases were upgrades, a trend expected to strengthen further.
Moreover, consumer habits have undergone dramatic transformation. Purchasing a car once involved visiting offline dealerships, often consuming considerable time and effort. However, user behavior is shifting toward online platforms for research and decision-making, with JD Auto’s data showing that 56% of NEV buyers had already chosen their models before visiting a physical dealership. This shift signifies a change in the traditional automotive retail and service model, where online platforms serve as critical decision-making hubs for users.
Behind the changing user demands lies a maturing and increasingly rational user base. As competition heats up, the withdrawal of players from the market can be characterized as a natural occurrence. However, the withdrawal of promised after-sales services and accompanying features concurrently becomes a key point of contention for customers.
The remarks made by JD Auto’s representative at the summit reflect JD’s judgment on the automotive industry: the automotive sector has reached a tipping point, transitioning from supply-driven to demand-driven. This is what the representative termed as the industry’s “leap of faith,” where understanding, reaching, and satisfying user needs are critical to sustaining rapid growth. Notably, three key trends were highlighted: a shift toward consumer experiences, the need for new features and services in NEVs to cater to upgrading buyers, and the importance of the lower-tier market for future growth.
Is JD Auto an outlier?
In the eyes of the industry, JD Auto may appear unconventional. It doesn’t manufacture cars but penetrates various aspects of the automotive industry. However, deeper insight into JD Auto’s development history reveals a company driven by user service.
20 years ago, JD sold a car mat to a car owner, marking its first encounter with the automotive industry. Expanding on this, JD entered comprehensive automotive product sales in 2012, coinciding with the mainstreaming of online shopping.
In 2017, amidst the O2O wave, JD expanded its business to include tires, engine oil, and other aftermarket components, aiming to provide a trustworthy option for car owners. This trajectory continued with ventures into car sales and adjacent areas, culminating in the establishment of the JD Auto division in June 2023.
JD Auto also embarked on a phase of rapid expansion, rolling out initiatives aimed at aftermarket services and conducting frequent car giveaways during festive periods.
Considering JD’s vast user base, the numbers speak volumes. With over 600 million users, including more than 200 million car owners, JD has a deep well of data. Over 100 million car owners have independently linked and uploaded precise information about their vehicles. This data wealth underpins JD Auto’s nuanced understanding of consumers, setting it apart in the automotive field.
This advantage forms the cornerstone of JD’s entry into the automotive industry. JD Auto not only responds to evolving user demands but also leverages its decade-long integration. A search for “JD Auto” on JD’s platform now reveals a comprehensive suite of automotive services covering buying, matching, maintenance, usage, and replacement. This holistic approach addresses user pain points, reflecting JD Auto’s commitment to value creation.
JD Auto’s innovative O2O model tackles decision-making difficulties and information overload in car purchasing. By integrating online and offline experiences, JD Auto offers data-driven recommendations for accessories and high-quality repair and maintenance services, addressing user needs across the vehicle lifecycle.
Summarily, JD does everything but manufacture cars, catering to user demands through innovation. This was evident during the summit, where JD Auto announced a joint investment of RMB 500 million to assist in user car replacements. Collaborating with industry associations and brands, JD Auto will kickstart a tire replacement plan, beginning from this year’s tire shopping festival.
On March 17, JD Auto unveiled the grand opening of its new energy experience center in Tianjin, aligning with its strategy to create a comprehensive platform for NEV services. As the line between online and offline automotive retail blurs, JD Auto’s one-stop service platform enhances efficiency in information sharing and transactions, providing new access points for manufacturers.
JD’s solution
JD Auto’s primary focus revolves around new energy. Yet, describing the current state of the new energy landscape in a single word can be challenging—it’s best characterized as chaotic. Even for those not closely following developments in NEVs, the noticeable trend of successive price reductions underscores the turbulence. These price wars among manufacturers extend beyond mere sales competition. They are also reactionary measures to shifting market sentiments.
Demographics are in flux as well, with the majority transitioning from first-time car buyers to those seeking replacements. Attention now gravitates toward underserved markets, while consumer habits increasingly favor online channels. The era of relying solely on product quality for market acceptance has waned, compelling manufacturers to compete holistically across the industry spectrum—from products to services to overall experiences. Consequently, the line between online and offline realms is blurring on this battleground.
Expanding into underserved markets and providing comprehensive services to car owners is no longer the domain of major manufacturers alone. It necessitates ecosystem-wide resource integration. JD Auto recognizes this imperative. Had it remained solely in the online sphere, JD Auto would have merely served as an entry point for car purchases, differing only in the online nature of transactions. Its industry contribution would have amounted to little more than augmenting manufacturers’ sales channels online.
Leveraging its roots in electronics, JD Auto initially established a solid foundation of service trust. Yet, it strives for more than replication, continually innovating to surmount barriers. Recent endeavors highlight its most significant endeavor: seamlessly integrating online and offline services within its business framework. This strategic move not only mirrors industry trends but also epitomizes the value JD Auto aims to bring to the new energy sector.
Whether it’s purchasing, maintaining, or utilizing cars, JD Auto’s initiatives are tailored to meet user needs and address market voids unfulfilled by current NEV manufacturers. Moreover, with over 1,500 car care outlets nationwide and partnerships with over 40,000 stores, JD extends its service network to more than 2,800 districts and counties, further penetrating underserved markets.
The rationale behind manufacturers like BYD and Voyah deepening their collaboration with JD Auto is clear. They recognize the indispensability and value of comprehensive automotive services. Insights from JD and BYD suggest that this collaboration encompasses channel marketing, after-sales services, and digitized supply chain services, extending beyond JD Auto to encompass JD’s logistics and industrial domains.
From a broader perspective, JD’s strategic thrust centers on the supply chain. Its cloud services and digital technologies facilitate the digital evolution of underlying industry systems. Taipu, JD’s intelligent supply chain solution, connects disparate industrial nodes and digitizes their operations and goods. Furthermore, JD’s logistics arm offers end-to-end supply chain solutions, emphasizing digitization and automation to enhance business efficiency and consumer experiences.
JD’s ambitions in the automotive sector should not be underestimated. Its development trajectory underscores its aspiration to envelop the entire user lifecycle and automotive industry chain. However, this should not be misconstrued as a direct threat to major manufacturers. JD Auto’s business model is transparent, and its measured approach to car manufacturing reflects a commitment to long-term sustainability.
In essence, JD’s stance conveys a resolute message: “We’re in it for the long haul.”
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xiao Xi for 36Kr.