Global car groups are experimenting with flash sales, endorsements by celebrity fashion bloggers and car vending machines in China, to maximise online sales in this growing market.
China’s online automobile transactions in 2016 hit 1m units, worth Rmb100.7bn ($15bn), according to Frost & Sullivan, a consultancy. To put that in perspective, vendors almost sold more cars online in China last year than they sold in Spain all together.
“China is definitely the world’s largest online car market, including luxury cars,” said Paul Gao, senior partner at consultants McKinsey.
The value of China’s online automobile transactions have grown at a compound annual rate of 65.5 per cent in the 2012-16 period, according to Frost & Sullivan, versus 13.7 per cent growth for China’s wider vehicle market. Frost & Sullivan defines online sales as transactions where vendors find their customers online. Customers then either pay online or are able to get financing through the site.
Chinese dealers are still involved and, most of the time, customers collect their vehicles at the dealership. McKinsey said online transactions accounted for 5 per cent of auto sales in China in 2016, up from 1 per cent in 2014. Online sales also appeal to young consumers — almost a quarter of car shoppers under the age of 24 bought online in China last year, said McKinsey — which helps vendors lock in brand loyalty among first-time buyers. Typically, buyers like to see and drive cars before buying them.
But in China younger buyers have already made up their minds before they buy and prefer the convenience of online sales.
100,000 The number of cars sold online in China for the recent Singles Day shopping event, in just 24 hours
Mini, the British luxury car brand owned by German automaker BMW, sold 1,600 cars in China online in the two years to the end of October 2017. That compares to none for the US and its home market, the UK. “Mini is definitely more successful in China than other markets in terms of online sales,” said Sean Green, Mini China’s Beijing-based head of Mini China.
This July, Mini paid Chinese fashion blogger Becky Li to pitch the cars to her thousands of followers, which resulted in 100 turquoise-coloured Minis being sold in five minutes via the popular Chinese WeChat app owned by Tencent.
Car groups are generally converging on Alibaba’s Tmall platform, a busy ecommerce site, and are making heavy use of the group’s Singles Day shopping event that falls every November 11. For the recently passed Singles Day, dozens of carmakers sold 100,000 vehicles in just 24 hours. Companies typically discount for Singles Day and car groups are no different — including the luxury brands. Italian carmaker Maserati, sold vehicles on November 11 at a discounted price of Rmb888,000 ($135,000) apiece versus the list price of Rmb1m.
Large car groups including SAIC Volkswagen, BYD, Guangqi Honda and Ford all sell vehicles online through Tmall, says Alibaba. Alibaba’s Tmall even announced earlier this year that it would open an online car “vending machine”.
Buyers will be able to browse cars on their smartphones, press the buy button, and the car will appear at ground level from a display tower. “It will make buying cars as easy as buying a can of Coke,” Alibaba said in a statement in August. “The era of online car shopping has already arrived.”
Sourced from the Financial Times