Runhua: An Auto Dealer’s Sales Channel Dilemma

In 2022, Runhua Group was a well-known automobile dealer in China with a large market share in the traditional fuel vehicle market. The recent surge of new energy (i.e., plug-in electric) vehicles was having a strong impact on the company’s main business. The high number of new automobile companies entering this promising market was threatening the dealership model, the traditional sales and distribution channel that dominated the market. Runhua Group had always held a long-term vision and a cautious attitude. However, it had to make a decision on how to respond to the subversive changes in the automotive industry in a timely manner. What should be the company’s strategy for the new energy vehicle business? How should it select which new energy brands to partner with?

This case can be used in advanced undergraduate- and graduate-level courses in marketing or marketing channel management. For a long time, marketing and channel management courses have mainly discussed the impact of channel changes on strategy from the perspective of manufacturers. They rarely mention the decision-making dilemma that intermediaries face in the transformation. This case can provide students with a specific situation from the perspective of intermediaries and then then help them fully understand the theoretical problem of marketing channel reform. Instructors can focus on how intermediaries make strategic decisions on marketing channel reform and guide students on a discussion of marketing channel reform and its impact on the industry’s development. After working through the case and assignment questions, students will be able to<ul><li>understand the composition of a corporate supply chain and a value delivery network, as well as the role of an intermediary in the distribution channel;</li><li>identify the drivers and the effects of changes in distribution channels, such as disintermediation and multi-channel systems;</li><li>differentiate among the dealership model, the agency model, and the direct sales model, and analyze the risks and benefits that intermediaries face from changes in these models.</li><li>compile the suitable selection criteria for intermediaries to determine which manufacturers to consider for partnership; and</li><li>determine what strategic countermeasures intermediaries can use to respond to changes in the industry’s sales and distribution channels.</li></ul>

• dealership
• channel
• new energy vehicle
• transformation
• partnership