Car Retailing - China - March 2014

INTRODUCTION
Definition
Report structure
Methodology
Abbreviations
EXECUTIVE SUMMARY
The market
Forecast
Figure 1: Forecast – volume sales of new cars, 2008-18
Figure 2: Forecast – volume sales of used cars, 2008-18
Car market in 2013
Figure 3: Car volume sales, by new cars, 2008-13
Figure 4: Car volume sales, by used cars, 2008-13
SUVs grew strongly to become the second largest car segment
Figure 5: Share of Car volume sales, by segment of passenger cars, 2008-13
Alternative-fuel cars still in infancy
German makers further extend their lead among international brands
Figure 6: Market share of passenger cars by volume, by car origins, 2010-13
Multinational joint ventures dominate
Figure 7: Market share of top ten passenger car manufacturers by volume, by passenger cars, 2013
Market drivers and barriers
Retail Channels
Car retailing development trends
Key policy updates in 2013
Dealership groups
The consumer: car ownership status
Figure 8: Household car ownership status, December 2013
The consumer: car purchase plan
Figure 9: Car purchase plan, December 2013
The consumer: resources used for last car bought
Figure 10: Resources used for last car bought, by comparisons, December 2013
The consumer: channel of last car bought
Figure 11: Channel of distribution used for last car bought, December 2013
The consumer: attitudes towards car aftersales services
Figure 12: Attitudes towards car aftersales services, December 2013
The consumer: attitudes towards car and car retailing
Figure 13: Attitudes towards car and car retailing, on any agreement, December 2013
Key issue: How to target consumers through differentiation
Key issue: Improvements required for current 4S model
Key issue: Does online car retailing have a chance?
What we think
THE MARKET
Key points
Car market in 2013
New car sales exhibited positive growth
Figure 14: Car volume sales, by new cars, 2008-13
Used car transaction still stunted
Figure 15: Car volume sales, by used cars, 2008-13
Segmentation
SUVs still grew strongly…
SUVs and MPVs emerge as two fastest growth segments
Figure 16: Volume growth rate of car sales, by car type, 2008-13
…and became the second largest car segment
Figure 17: Share of Car volume sales, by passenger car and commercial car, 2008-13
Figure 18: Share of Car volume sales, by segments of passenger cars, 2008-13
Alternative-fuel cars still in their infancy
Figure 19: Share of alternative-fuel car sales, by electric cars and plug-in hybrid electric cars, 2013
German makers further extend the lead among international brands
Figure 20: Volume sales and growth rate, by Audi, BMW, and Mercedes-Benz, 2013
Figure 21: Market share of passenger cars in volume, by car origins, 2010-13
Multinational Joint Ventures dominate
Figure 22: Market share of passenger car manufacturers in volume, by passenger cars, 2010-13
Figure 23: Market share of top ten passenger car manufacturers in volume, by passenger cars, 2010-13
Market drivers
Economic growth continues
Figure 24: GDP and growth rates, China, 2008-13
Urban and rural income rise
Figure 25: Annual per capita net income and actual growth rate of urban and rural residents in China (RMB), 2008-13
Urbanisation
Still room for car parc growth
Change of car ownership dynamics
Booming luxury cars
Alternative energy push
Growth barriers
Restriction on licence plates
City congestion and traffic pressure
Parking space limitation
Car exhaust emissions impact on environment
The risk of structural excess production
Forecast
Figure 26: Forecast – volume sales of new cars, 2008-18
Figure 27: Forecast – volume sales of used cars, 2008-18
RETAIL CHANNELS
Key points
Car retailing development trends
Dynamics of production and retailing
The 4S model still dominates but multiple channels start to demonstrate greater potential
The benefits of alternative retailing models in lower tier cities
Online car purchasing has taken off, but still has a long way to go
Key policy updates in 2013
Implementation of Provisions on the Liability for the Repair, Replacement and Return of Household Automotive Products
Discussion on revising the Administration of Automobile Brands Sales Implementing Procedures”
Announcement of the Specifications of Used Car Appraisal
Dealership groups
Figure 28: Top ten China auto dealer groups, 2012
Retailer profiles
China Grand Automotive Service Co., Ltd.
Pang Da Automobile Trade Co., Ltd.
Zhejiang Materials Industry Yuantong Automobile Group Co., Ltd.
Online platform:
Tmall
THE CONSUMER – CAR OWNERSHIP STATUS
Key points
Consumers are mainly purchasing new cars
Figure 29: Household car ownership status, by car buyers, December 2013
Currently car buyers are likely to be middle-aged, with higher incomes, and from tier one cities
Figure 30: Household car ownership status, by car buyers in demographics, December 2013
Multiple car ownership is still rare
Figure 31: household car ownership status, by multiple car ownership, December 2013
Room for a further car ownership boost…
Figure 32: Household car ownership status, by car non-buyers, December 2013
…and these potential buyers are likely to be young, single, and from lower tier cities
Figure 33: Household car ownership status, by car non-buyers, by demographics, December 2013
THE CONSUMER – CAR PURCHASE PLAN
Key points
Car purchase intention is strong…
Figure 34: Car purchase plan, December 2013
…especially among younger professionals, people with family and children
Figure 35: Car purchase plan, by demographics, December 2013
Current car buyers show more interest in buying cars in the near future
Figure 36: Car purchase plan, by car ownership status, December 2013
THE CONSUMER – RESOURCES USED FOR LAST CAR BOUGHT
Key points
Online becomes the most important information source
Figure 37: Resources used for last car bought, by comparisons, December 2013
Online information channels are most popular with people in their 30s
Figure 38: Resources used for last car bought, by demographics, December 2013
Word-of-mouth and dealership visits are still key channels for consumer interaction
Figure 39: Resources used for last car bought, December 2013
Limited influence of TV advertising and emerging appeal of mobile phone apps
Figure 40: Resources used for last car bought, by TV advertisements and mobile apps, December 2013
THE CONSUMER – CHANNEL OF LAST CAR BOUGHT
Key points
4S shops are still the mainstream point of purchase for cars
Figure 41: Channel of last car bought, December 2013
Current 4S shop users tend to be older, married, and wealthier people
Figure 42: Channel of last car bought, by demographics, December 2013
Consumers starting to embrace more alternative purchase channels
Figure 43: Channel of last car bought, by comparison, December 2013
THE CONSUMER – ATTITUDES TOWARDS CAR AFTERSALES SERVICES
Key points
The quality of aftersales services offered by 4S shops is recognised, but price is a likely barrier
Figure 44: Attitudes towards car aftersales services, by service quality and price, December 2013
Consumers are not looking for the lowest cost, but for value-for-money services
Quality aftersales services needed
Half of consumers prefer to purchase new cars to avoid potential maintenance problems
Figure 45: Attitudes towards car aftersales services, by car usage, December 2013
The quality of aftersales services will impact future consumer purchase choices
Figure 46: Attitudes towards car aftersales services, by satisfaction of aftersales services, December 2013
THE CONSUMER – ATTITUDES TOWARDS CAR AND CAR RETAILING
Key points
Further improvements required for 4S shops
Figure 47: Attitudes towards car and car retailing, by improvements to the 4S model, by any agreement, December 2013
Online car buying channels are welcomed
Figure 48: Attitudes towards car and car retailing, by attitudes towards online car purchase, by any agreement, December 2013
Convenience is an important factor in purchase choice
Figure 49: Attitudes towards car and car retailing, by car buying process, by any agreement, December 2013
KEY ISSUE – HOW TO TARGET CONSUMERS THROUGH DIFFERENTIATION
Key points
Consumer segmentation
Figure 50: Target groups, December 2013
Enthusiasts (33% of sample)
Conservatives (21% of sample)
Casualists (19% of sample)
Skeptics (27% of sample)
Figure 51: Attitudes towards car and car retailing, by target groups, December 2013
What it means
KEY ISSUE – IMPROVEMENTS REQUIRED FOR CURRENT 4S MODEL
Key points
No longer the golden standard in car retailing, but the 4S model remains important
Figure 52: Channel of last car bought, by comparison, December 2013
Ways for improvements
Leveraging car dealership groups
Figure 53: Attitudes towards car and car retailing, by agreement with “4S stores of well-known dealership groups offer better car purchasing services”, December 2013
Enhancing the in-store experience
Figure 54: Attitudes towards car and car retailing, by agreement with “I would like to see more advanced technologies that can facilitate my car buying process”, December 2013
Attention on female power
Figure 55: Car purchase plan, December 2013
What it means
KEY ISSUE – DOES ONLINE CAR RETAILING HAVE A CHANCE?
Key points
Online purchase savvy nation
Online car purchase channel starts to emerge
Online car buying activities in 2013
The pros and cons of online car retailing
Figure 56: Attitudes towards car and car retailing, December 2013
O2O has the potential to aid online car purchasing
The success of Tesla
What it means
APPENDIX – CAR OWNERSHIP STATUS
Figure 57: Household car ownership status, December 2013
Figure 58: Most popular household car ownership status, by demographics, December 2013
Figure 59: Next most popular household car ownership status, by demographics, December 2013
Figure 60: Other household car ownership status, by demographics, December 2013
Repertoire analysis
Figure 61: Repertoire household car ownership status, December 2013
Figure 62: Repertoire household car ownership status, by demographics, December 2013
Figure 63: Car purchase plan, by repertoire of household car ownership status, December 2013
APPENDIX – CAR PURCHASE PLAN
Figure 64: Car purchase plan, December 2013
Figure 65: Car purchase plan, by demographics, December 2013
Figure 66: Car purchase plan, by most popular household car ownership status, December 2013
Figure 67: Car purchase plan, by next most popular household car ownership status, December 2013
APPENDIX – RESOURCES USED FOR LAST CAR BOUGHT
Figure 68: Resources used for last car bought, December 2013
Figure 69: Most popular resources used for last car bought, by demographics, December 2013
Figure 70: Next most popular resources used for last car bought, by demographics, December 2013
Figure 71: Other resources used for last car bought, by demographics, December 2013
Figure 72: Resources used for last car bought, by household car ownership status, December 2013
Figure 73: Resources used for last car bought, by channel of last car bought, December 2013
APPENDIX – CHANNEL OF LAST CAR BOUGHT
Figure 74: Channel of last car bought, December 2013
Figure 75: Most popular channel of last car bought, by demographics, December 2013
Figure 76: Next most popular channel of last car bought, by demographics, December 2013
Figure 77: Channel of last car bought, by household car ownership status, December 2013
Figure 78: Channel of last car bought, by car purchase plan, December 2013
APPENDIX – ATTITUDES TOWARDS CAR AFTERSALES SERVICES
Figure 79: Attitudes towards car aftersales services, December 2013
Figure 80: Most popular attitudes towards car aftersales services, by demographics, December 2013
Figure 81: Next most popular attitudes towards car aftersales services, by demographics, December 2013
Figure 82: Attitudes towards car aftersales services, by household car ownership status, December 2013
Figure 83: Attitudes towards car aftersales services, by car purchase plan, December 2013
APPENDIX – ATTITUDES TOWARDS CAR AND CAR RETAILING
Figure 84: Attitudes towards car and car retailing, December 2013
Figure 85: Agreement with the statement ‘There is still room for improvement in terms of the expertise of sales consultants in 4S stores’, by demographics, December 2013
Figure 86: Agreement with the statement ‘Overall, I am satisfied with the services provided by 4S stores’, by demographics, December 2013
Figure 87: Agreement with the statement ‘4S stores of well-known dealership groups offer better car purchasing services’, by demographics, December 2013
Figure 88: Agreement with the statement ‘I would like to see more advanced technologies that can facilitate my car buying process’, by demographics, December 2013
Figure 89: Agreement with the statement ‘The prices of services offered by 4S stores currently are not transparent enough’, by demographics, December 2013
Figure 90: Agreement with the statement ‘Buying a car from online retailers is appealing to me’, by demographics, December 2013
Figure 91: Agreement with the statement ‘The after sales services offered by online car retailers are not sophisticated enough’, by demographics, December 2013
Figure 92: Agreement with the statement ‘I would like to see more online car retailers to choose from’, by demographics, December 2013
Figure 93: Agreement with the statement ‘The quality of the car sold online is as good as those sold offline’, by demographics, December 2013
Figure 94: Agreement with the statement ‘The current car buying process is too complicated’, by demographics, December 2013
Figure 95: Agreement with the statement ‘Lower prices is always prioritized over offering good sales service when buying a car’, by demographics, December 2013
Figure 96: Agreement with the statement ‘The one-stop car buying service offered by car zones/car cities makes the car purchasing process more convenient’, by demographics, December 2013
Figure 97: Attitudes towards car and car retailing, by household car ownership status, December 2013
Figure 98: Attitudes towards car and car retailing, by car purchase plan, December 2013
APPENDIX – FURTHER ANALYSIS
Figure 99: Target groups, December 2013
Figure 100: Target groups, by demographics, December 2013
Figure 101: Household car ownership status, by target groups, December 2013
Figure 102: Car purchase plan, by target groups, December 2013
Figure 103: Resources used for last car bought, by target groups, December 2013
Figure 104: Channel of last car bought, by target groups, December 2013
Figure 105: Attitudes towards car after sales services, by target groups, December 2013
Figure 106: Attitudes towards car and car retailing, by target groups, December 2013