Chinese consumers prefer to buy cheaper cars
July 9, 2019 Category China News Round-up, Weekly
Chinese consumers are not willing to pay as much as before when buying a vehicle, according to a study by consulting firm J.D. Power. The study found that the average price of cars considered by buyers has dropped by 12% to CNY215,000 in 2019 from CNY244,000 last year. Willingness to replace the current car with a new one also decreased to 20% from 37% in 2016. “Tighter budgets and the unwillingness to replace current vehicles make it hard to be optimistic about the new car market in 2019,” said Edward Wang, Research Director of J.D. Power China.
“Consumers in China are motivated by demands such as working toward a better life or enjoying driving, which means buying a new car is more of an option rather than a necessity,” Wang said. In addition, battery technology and vehicle reliability have become big concerns in the new-energy vehicle (NEV) market. Worries about the range of NEVs dropped to 33% of respondents from 42% in 2018, while concerns about battery technology and vehicle reliability have increased by 9% and 8%, respectively. The study also found that when considering a new car, the importance of technology has risen to 7% from 3% in 2018. Buyers also expect multimedia features with built-in navigation systems, bluetooth and an internet connection. Wang said that customer expectations of in-vehicle technology significantly increase when the buying budget exceeds CNY100,000.
Consumers are also wary of buying cars online. Although 70% of respondents say they “definitely would” or “probably would” buy a new car on the car manufacturer’s official website or a third-party trading platform or mobile app, only 7% of them said they are willing to pay the full price online. The study, done online in March and April, was based on 11,977 responses. China had about 250 million cars by the end of June, according to the Ministry of Public Security. There were 3.44 million new-energy cars in China, which accounted for 1.37% of the total, the Ministry said. The number of newly registered automobiles reached 12.42 million units in the first half, down 10.06% compared with the same period last year, the Shanghai Daily reports.
Ford Motor sold 154,042 vehicles in the second quarter of 2019 in China, decreasing 21.7% from the same period last year. Sales of Ford-branded vehicles totaled 92,885 in the second quarter, up 24% compared with the first quarter, and down 28% year-on-year. General Motors reported a 12.2% year-on-year decline in second-quarter sales in China. GM and its joint ventures delivered 753,926 vehicles in China in Q2, but the high-end brand Cadillac delivered 66,523 units, a 36.6% year-on-year rise. Audi’s China sales jumped 22.5% year-on-year in June to 58,788 units, helping the German premium carmaker to consolidate its position in China.
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