Giant Motors, Demystifying the Electric VehicleBy Alejandro Enríquez | Tue, 07/14/2020 - 06:00
Q: In 2019, Giant Motors Lationamérica (Giant Motors) had a production goal of 10,000 JAC vehicles. How has that goal advanced?
A: The goal was to reach an annual production of 10,000 vehicles by 2021 to meet market demand. We exceeded our expectation. Today, we have 30 JAC stores nationwide managed by the 20 best and largest dealership groups in Mexico. Dealerships handle all maintenance and repairs and exhibition of vehicles is completely digital. The level of investment made by dealers has been extraordinary and the brand has grown in profitability and unit sales quite well.
In 2019, we grew 63.5 percent, which makes us the fastest-growing brand in the market. The base is much smaller than that of others but somehow the takeoff was much faster than we were expecting. The company’s greatest advantage has been its capability to react to the market with changes in production, training of people and automation, among others.
Another strategy that has worked well for distributors and the plant is the introduction of new models. We are one of the most dynamic brands regarding model launches. Last year, we launched the ESEI 4, which participates in one of the most competitive and largest segments of the market: SUVs. We also launched the T-6 and T-8. The former has had extraordinary acceptance in the market as the best-equipped and most powerful medium-sized pickup in its segment. We are taking the lead in the Mexican market, which is not easy.
Q: What factors have contributed to Giant Motors’ success?
A: I always attribute it to our network of distributors. People who buy from these distributors have been shopping with that group for a lifetime, which breaks the first barrier of trust. There are almost 10,000 JAC users and the feedback we get from them is quite positive. There are cases of families that use our brand from father to son. Suddenly, there are three of our cars in a family. In areas like Morelia, Cancun or Merida we already have a 10 or 15 percent market penetration in the SUV segment. Our five-year warranty has also been a key differentiator, although it has been a challenge for our components and assembly process. Mexico is not an ideal country in terms of driving conditions and yet, our vehicles have met the strictest requirements.
The emergence of electric vehicles will strengthen the brand even further. One of our great strategic decisions was to not introduce an electric vehicle to Mexico just to show that we could, but to build an entire family of electric vehicles. We launched four electric models and brought that culture to Mexico, which implies a great commitment.
With electric vehicles, there is the issue of spare part availability. Spare parts for these vehicles are unique and in short supply. Given this situation, we launched our Twin Car Concept. For each of our vehicles, we offer an electric and an internal combustion model. These are exactly the same, except for the powertrain. We guarantee that spare parts will always available for both models. A clear example of the cost-benefit of this business model can be seen with the ESEI 1. This five-passenger unit comes in an internal combustion and an electric version. While a big family would not buy it in its electric version because of the long trips they may take, a driver who only commutes within the city could benefit greatly from an electric car. Meanwhile, both versions are fully supported in terms of spare part availability. There is no advantage like that in the electric vehicle market at the moment.
Q: How will Giant Motors deal with the skepticism regarding electric vehicle infrastructure in Mexico?
A: There are three myths that are rebuttable in this regard. The first is undoubtedly the cost. An electric vehicle may be much more expensive than a combustion vehicle, but this is only in the short term. It is a different story when considering long-term savings. Monthly gas expenses for an internal combustion car with an average use of 28km to 30km per day in the city would imply that in three years, the driver has paid for their car twice.
The second point to consider is the economic benefits related to electric vehicles. These vehicles have much higher deductibility levels and when leased, they are 100 percent deductible for companies. Electric vehicles allow great savings in the administration of gasoline and service expenses, among others.
Third, clients should know that Mexico City has the largest number of electric vehicle chargers per vehicle in the world. Furthermore, cars with 350km or 400km of autonomy can be fully charged overnight. These vehicles also enjoy preferential parking and their use results in a lower energy consumption-base tariff. The barrier to their adoption is cultural and that requires an education strategy.
Giant Motors Lationamérica is a Mexican automotive assembly company focused on production of commercial and passenger vehicles for the Mexican market. The company partnered with JAC Motors in 2017 to assemble and market passenger vehicles in Mexico