Georgia Zhuang, Head of Auto Research, Nielsen Greater China
Chinese consumers are becoming more realistic when it comes to purchasing an automobile, with the majority of respondents in Nielsen’s 2010 China Auto Trends Monitor Report citing both 'quality of life' and 'ease of transport' as the most important factors when making the decision to buy an automobile.
As a result of the decreasing impact of government stimulus policies and rising house prices, overall intention to buy an automobile in the next 12 months has fallen 21% year-on-year to only 32%. Meanwhile, 40% of those potential automobile owners said they would spend only RMB 80,000 – 120,000 (roughly $12-18K U.S.) on purchasing an automobile. This change in behavior is reflected in consumers' financing methods: most consumers will still pay in full with cash; subsequently, the number of consumers who would choose to seek a bank loan to finance the purchase of a new automobile has increased since last year—up four percentage points to 29%. While consumers have returned to a more rational approach to purchasing, Chinese brands have been expanding their lines and launching intensive marketing campaigns over the past year, quickly overtaking American and Japanese brands as the top choice for potential automobile buyers.
Stylish and Sporty Selections
Demand for private ownership of automobiles has become a symbol of quality, of a person’s values and of their personality. Sixty-five percent of respondents think that design is the most important factor in a new automobile. While demand for comfort based on a safe design is gradually increasing, a stylish and sporty look is favoured most highly among consumers, with women preferring a stylish look, and men preferring something sportier.
In particular, the 'stylish' element should be most prominent in the front of the automobile, as over 70% of consumers, and especially potential owners, said they would judge how fashionable an automobile is by looking at the front. Nearly half of those who responded think that the rear of an automobile can also represent how 'fashionable' it may be. Similarly, consumers believe that both the front and rear ends of an automobile are best for displaying its 'sporty' features.
A car’s body type is also able to satisfy consumer demand for a sporty or fashionable look, and there is huge potential for innovation from all brands across the market. For first-time buyers, a sedan is no longer the only option for a family automobile, and SUVs, hatchbacks and many other styles are now equally considered. Provided that companies and brands alike meet consumer needs and show a sense of creativity, there is a huge opportunity for stylish and sporty designs in everyday automobiles, SUVs and sports cars.
As consumers are becoming more aware of the importance of environmental protection, their interest in alternative energy technologies is also increasing, with attitudes changing in particular towards alternative energy sources for automobiles. The majority of respondents said they would consider buying an alternative energy car in the future—in particular they would change from a traditional petrol-run car to a smaller, hybrid car—as they feel the impact of this change on current automobile driving behaviour would be quite small. In reality, this kind of thinking has not fully developed into actual behaviour and an understanding of alternative energies available on the market is still very low.
There are three other main factors that determine a consumer’s decision when choosing an alternative energy use car: ease of use, maturity of the technology and the cost of purchase and maintenance. Introducing subsidies to promote the use of these kinds of cars is therefore, a must. Nielsen discovered that an average of 20% of consumers cited government subsidies as a reason for choosing an alternative energy car and a subsidy of 30% of the cars’ ticket price is enough to satisfy a vast majority of people.
Factors that hinder consumer purchasing can be dealt with through marketing communications. Manufacturers have a responsibility to not only strengthen consumer understanding of alternative energy technology—through effective advertising and marketing events, but also to make alternative energy more practical and accessible through continuous breakthroughs in, and improvement of, technology.
As the government and manufacturers continue to work together on incentives and infrastructure, consumers will come to have more trust in alternative energy automobiles, which will translate into an increase in buying behavior.