China Auto Logistics Inc's Comment on Competitors and Industry Peers
Tianjin is a major entry port in China. Many of the vehicles imported into Tianjin
are imported by general dealers such as Toyota, Honda, Nissan, Ford, BMW, Land
Rover and Mercedes-Benz. We purchase our inventory through our suppliers, who
import vehicles directly from the foreign countries in which they are manufactured.
Competition has increased in recent years due to an increase in the number of
smaller shops entering this market. For the specialized services market related
to Automobile Value Added Services and Financing Services, we believe we have
secured a substantial share of the market for such services in Tianjin. We began
to operate a used car sales business through Car King Tianjin. Although there
are several other companies in the Tianjin market that provide the individual
service we provide, we believe that we are the only one-stop automobile service
provider in Tianjin.
Competitive threats may come from any company that is able to provide the services
offered by us at a lower price and better quality. We charge appropriately for
the high-end, high-quality services and products we offer, and we do not aspire
to be the lowest cost provider of our services. Rather, we aim to distinguish
ourselves from our competitors by providing the highest value to our customers.
However in recent years, due to strong competition from other importers and other
authorized dealers, we have been forced to lower our prices in order to maintain
our leadership position. Consequently our gross margin continues to decline, but
we believe that our gross margin is at its lowest level, and we expect it to stay
at the current level in future quarters.