Across China, one can detect significant regional differences in consumer behavior. Also in the auto industry characteristics vary: local consumer preferences, as well as the development of the infrastructure, for instance, differ among the regions which influence buying behavior and is reflected in the car sales. Consequently, businesses operating in the respective industry shall be aware of this fact and understand how to apply the right sourcing strategies, how car usage and how pricing of automotive components differ to ensure success in the nation.
The client’s interest: pricing of automotive components in China
Daxue Consulting’s client, a well-recognized car manufacturer with over 600.000 employees worldwide, contacted our consultants with two different requests: The company asked Daxue’s research team to conduct a study on the usage of cars in China, as it sought to adopt new technologies on the new models. Additionally, the organization aimed to gain a clear picture of the policies towards pricing of automotive components in China as well as the availability of spare parts to see what is being done in China.
An in-depth research project over several months
As to fulfill the client’s request, Daxue Consulting divided the projects into two separate phases:
- Monitoring OEM vs. Aftermarket (OES/IAM): Pricing of automotive components in China
The research team monitored the pricing of OEM equipment as well as the aftermarket equipment. Therefore, Daxue prepared Mystery shopping calls (smart calls) to authorized dealers and independent ones. It included the
- Design of the calling scripts (selecting suitable scenarios to appear plausible)
- Classification of auto parts (such as into ‘fast moving parts’ or ‘rarely replaced parts’)
By pretending to be a vehicle owner the team carried out thousands of smart calls over a few months in different cities and a variety of car brands included.
Clement Mougenot, Head of Research at Daxue Consulting, states: “Pricing of automotive components in China has become an important topic, to benchmark prices vs. competition, but also prices of official auto-parts vs. prices of aftermarket auto-parts. For this client, we monitored prices of more than 10,000 automotive parts across 29 car brands in 3 cities in China”.
- Mapping of car usage across China
Daxue Consulting, as to obtain the requested knowledge about Chinese driving habits, prepared all necessities to conduct the online survey with car owners. It encompassed the design of the questionnaire, screening participants according to the project’s requirements, briefing and training the assistants, and managing the uniquely developed online survey platform, which enables reliable data collection, daily monitoring through cloud management, and automated quota control across the nation.
Daxue Consulting obtains a large database of individuals in mainland China with over 400,000 active respondents, which enables them large-scale surveys with project-relevant participants. Mougenot explains: “It was almost an ethnographic study on the influence of culture on the daily usage of cars in China.” It comprised, for example:
- The average driving distance per year, and day
- Primary drivers for vehicle usage, do they have to use cars in daily life
- Segmentation: type of roads, different economic regions, different city-tiers, as well as three different types of vehicle according to the client’s request
Daxue prepared detailed reports with valuable insights
After data cleaning and validation, the research team analyzed the gathered data and made two different reports for the client derived from the research. Daxue Consulting provided the client on the one hand with the detailed RAW data of pricing of automotive components in China, but also prepared a report on the key findings, including the availability of spare parts.
The second one encompassed a precise mapping of car usage across different types of cities, people, car models, road types. The geographic distribution and the size of the sample represented the coverage of mainland China which helped the client to adapt its technology to Chinese habits.
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