China car buyers put price ahead of brand

"Service is something that is untapped in China," commented ACNielsen China's director of automotive research, Philippe Coquelle. "This is what will build a competitive edge." Carmakers seeking to build stronger brands will have to teach dealers to become more customer-oriented, Coquelle advised. The survey revealed that less than one in 10 car buyers visit a showroom. "The media is the main means of grabbing consumers' attention," Coquelle said. "This disinterest is first traditional as the model availability is low, but also reflects the basic level of services provided through dealership." Only high-end makes such as BMW and Mercedes-Benz had managed to carve out a clear image while middle market car sales remain indicative of price and availability rather than of brand strength. "If some brands have managed to dominate the market, they have not yet succeeded in establishing a strong brand image," he said. "Brand loyalty is still a long way off." Price is more than twice as important than brand when choosing to buy a car, according to Nielsen's survey. Vehicle performance, design, safety and comfort did not register as primary concerns. Most people looking to buy a car in the next 12 months are in Beijing, where prices are cheaper and there are more models to choose from. Nielsen found that 12 per cent of people it spoke to in Beijing were planning to buy a passenger car in the next 12 months. On average cars cost Rmb 138,725 (US$ 16,700) in Beijing compared to Rmb 221,180 in Shanghai and Rmb 193,530 in Guangzhou. Coquelle said there would be no major growth in car buying until financing arrangements were changed. Currently about nine out of every 10 cars sold in China is purchased with a one-off payment, compared with about 70 per cent in the US and Western Europe which involve some kind of financing agreement. ACNielsen asked 2,500 consumers in Beijing, Shanghai and Guangzhou about their vehicle ownership and how they felt about their brands. It found that the most popular cars in China are Shanghai Volkswagen and FAW Volkswagen, together representing over a third of car-owners. Shanghai GM had seven per cent of the market while Dongfeng Citroen and Guangzhou Honda both had a two per cent share. Car ownership varies between the cities, reflecting the relative strengths of the dealer networks there. Over two-thirds of Shanghai Volkswagen owners were in Shanghai whilst 80 per cent of Guangzhou Honda owners were in Guangzhou. Coquelle expected these biases to change over the next two to three years as distribution improves, with quality of service becoming an even more critical component in brand differentiation.