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Bloated Chinese auto market gives rise to the super savvy shopper

New study reveals China’s car buyers are now in the driving seat


When it comes to buying a new car, China is creating a new breed of savvy shopper eager to find the best deal. As customers wise up to the saturated market – there are now 379 car brands in China, up from just 64 ten years ago – international brands are being forced to radically re-think how they approach cash-rich Chinese shoppers.

Over three quarters (77 per cent) of Chinese car buyers were prompted to part with their cash by a special deal or promotion, compared to just 39 per cent in 2012, according to The Automotive Path to Purchase Study (TAPPS) from global research consultancy TNS. These shoppers are also seeking advice from a much wider range of sources than previously, including social media, blogs, car dealers and friends and family, in order to secure the best deal.

As a result, shoppers are taking up to 40 per cent longer to make a decision than they were a year ago, as many realise that playing the ‘waiting game’ will lead to a better offer in the long run.

However, international car companies must be careful not to discount their prices too heavily as Chinese shoppers are still status-conscious. The lesson for Western brands targeting China is that they must maintain a sense of aspiration – avoiding being seen as a bargain brand - while striving to reach shoppers across every channel they use.

Andy Turton, Global Development Director at TNS, said: “The China of the past where hungry first-time buyers dominated the market is gone; the balance of power has shifted into shoppers’ hands and they know it. As supply outstrips demand, international automotive brands need to provide clear and consistent messages across a much broader range of different media channels in order to convince these super bargain hunters to part with their cash.”

The longer buying cycle and influence of so many different sources means brands also need to work harder to ensure their messaging is clear and consistent at every stage of the process. This could be through TV ads, through social media, or through independent blogs and automotive websites.

Those that fail to integrate these channels will lose out to fickle customers, open to being lured away with a better offer. Only one in ten people in China eventually buy the car they have in mind originally at the start of their search.

The number of car brands available has increased by over 400 per cent in the last ten years, while US and German car companies are increasingly dominating the market with combined sales of over four million vehicles in 20121.

Turton added: “In this saturated market, car brands need to ensure they are reaching customers via every avenue possible – both offline and online – if they are to persuade shoppers to buy. Yet while price positioning is important, companies need to remember that status and aspiration still carry real weight.

“Those who discount too heavily risk losing a mass of potential buyers who then see that brand as the less credible or desirable option. Some international car companies have really struggled in China due to an over-reliance on deals and promotions, despite having strong equity in the West. Yet brands that can get this balance right are in a powerful position to shift their sales into the fast lane.”

¹Source: CAAM (China Association of Automobile Manufacturers), including Sedans, SUVs and MPVs.

The Automotive Path to Purchase Study (TAPPS) provides powerful insights into actual consumer behaviour in developing and mature markets through their unique online and offline path to purchase. This real-time online study assesses how brands can influence buyers at different stages of the journey through a range of media channels. The study was conducted among 1000 consumers in China over a four month period from November 2012 to February 2013.

About TNS
TNS advises clients on specific growth strategies around new market entry, innovation, brand switching and stakeholder management, based on long-established expertise and market-leading solutions. With a presence in over 80 countries, TNS has more conversations with the world’s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world.

TNS is part of Kantar, one of the world’s largest insight, information and consultancy groups.
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About Kantar
Kantar is the data investment management division of WPP and one of the world’s largest insight, information and consultancy groups. By connecting the diverse talents of its 13 specialist companies, the group aims to become the pre-eminent provider of compelling and inspirational insights for the global business community. Its 28,500 employees work across 100 countries and across the whole spectrum of research and consultancy disciplines, enabling the group to offer clients business insights at every point of the consumer cycle. The group’s services are employed by over half of the Fortune Top 500 companies.
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