Market Research on Car sales in China
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China` spectacular economic growth over the past 20 years has been reflected in the emergence of the world`s fastest growing consumer market and a vibrant, burgeoning middle class. As incomes in China have risen, so have Chinese consumers` interest in products that were previously out of their reach, for example, cars. In 2013, car sales in China exceeded 22 million vehicles and this figure made China the first country to sell more than 20 million vehicles.
Car sales in China will reach historical highs
Although China`s automotive market growth is cooling down, however, car sales in China is still expected to reach 31 million new registrations in 2020 with a much higher annual increasing rate of 6% than other economies in the world. It is not surprising that car manufacturers are placing China at the very center of their long-term growth strategies.
Currently, Volkswagen is the undisputed sales leader in China. However, within the market, there are segments that are still expanding much faster, most notably luxury car sales that are aimed at China’s ballooning army of super-rich people. According to market research, the luxury car market in China has enjoyed a growth rate around 37%.
Still huge potential for car market in China
Along the path to be mature, there is still plenty of opportunities for other local foreign car manufactures to capture market share in China. The sheer expanse of its geography, the complexity of its sales channels and the rapid pace of urbanization create chances in 150+ cities in China. Considering market divisions and product distributions, car manufacturers need to address a diverse mix of values to influence consumers` buying decisions.
There are several trends for automotive market in China in the next decade. First, sales of sport utility vehicles (SUVs) will triple, although sedans will remain the largest segment. Second, there will be more second-time buyers and they will buy more high-priced cars. Third, the volatile growth rates for new cars observed over the last two decades are likely to continue. What is more, consumer behavior by region and car-model preference will vary greatly.
China` economy is expected to continue to grow at 7% to 8% yearly in the next 10 year. And the number of high-income urban households with over 80,000 RMB a year will expand to 58% of the population in 2020. Higher incomes plus low auto penetration now suggest that the market is far from saturation. The expansion of road systems will continue to stimulate consumers` expectation of self-driven journeys and thus, the demand for automotive and the car sales in China.
Selling cars in China require market understanding
Nevertheless, regardless of the expected development, car manufacturers and dealers should not ignore that the volatility in Chinese car market and of car sales in China, combined with chronic overcapacity, has brought challenges to doing business in China. Car manufacturers should put more emphasis on understanding consumers` needs and behaviors, for example, increasing weight on quality and safety. Recent market research shows that Chinese consumers rely predominantly on four factors when buying cars: friends and colleagues (49%), family members (64%), manufacturer websites (53%) and social media (72%). A suggestion could be that auto manufacturers and deals turn their investment on TV to strong social media sites for further branding.
Global manufacturers will keep on investing in China regardless of the debate and content themselves that half a loaf is better than none, especially when the loaf is much bigger than that in other markets.