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New Proposition for Change: An Insight Report on China's Automobile Consumption Trends

By Du Junyi Sep 04, 2019
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"Zigzag · Prosperity" can be regarded as the buzzwords of China's automobile market in 2019. "Zigzag" indicates faster survival of the fittest brought by sharpened competition amid downward pressure on sales volume. "Prosperity" means that as the trends of "intelligent, network-connected, electric and sharing" go viral, human resources, capital, policies and other resources are gathering in the field of innovation, and the once-in-a-century new reform will take the automobile industry to a new level.

However, what remains unchanged is that all sectors of the industry need to have an insight into the changes in market trends and accurately position the needs of users. On Aug. 19, Autohome released the China Automobile Consumption Trends Insight Report at the 2019 Global Automobile Industry Innovation Conference, based on massive and accurate user data, to explore user expectations in depth and clarify new consumption ideas in the process of change.

汽车之家

汽车之家

Understand core argument in 60 seconds:

1. The complete report contains more than 30,000 words including five main chapters of "Industry", "User", "Brand", "Product" and "Service". Based on the massive data and accurate investigation of 300 million real users of Autohome, the new trends of current automobile consumption are interpreted in detail.  

2. Thanks to the market potential and inertia of demand, there is still huge room for growth in China's auto market in the future. It is expected that the year-on-year decline rate is expected to shrink to-3.2% in 2019 and sales will return to normal in 2020. 

3. Through the brand matrix, we can get a comprehensive insight into the consumers' concern about the brand recognition and products. The trend of the brand index of the mainstream foreign brands is stronger than that of the Chinese brands. The quality, word of mouth and service are the trident to improve the brand reputation.  

4. In terms of products, users are rational and forward-looking to the products. The current product demands are pragmatic, mainly considering quality, safety and economy. In the future, users expect intelligent travel in full scenes.  

5. In terms of service, economy and timeliness are the focus of users' attention, and young users have a high acceptance of the new service.

●China's passenger car market still has room for growth

From the overall macro-economic point of view, China's GDP dropped from 10.6% in 2010 to 6.3% in the first half of 2019. The L-shaped trend of economic growth is a severe challenge for all industries, including automobiles. However, it is optimistic that the changes in China's industrial structure, the advancement of urbanization, the continuous improvement of transportation facilities, the change in energy consumption structure, and the sustained growth of per capita disposable income will have a positive effect on promoting automobile consumption.

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The past two years have witnessed a turning point in the development of China 's automobile market, farewell to the era of extensive high-speed growth in the past, the year 2018 saw the first "negative growth" .According to Autohome forecasts, China's passenger car market (narrowly defined passenger cars, excluding micro-passengers) will have an estimated 21.03 million units of end-of-year sales in 2019. China's car market will continue to experience negative growth in 2018, but the decline will be reduced to 3.2%.

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China's car market is expected to pick up in 2020, with sales expecting to reach 22.48 million units, up 6.9 percent from 2019. Although China's passenger car market has entered a stage of low-speed growth, there is still huge room for growth in the future due to market potential and demand inertia. China's passenger car market is expected to sell 33.73 million units by 2028.

The research found that for users, the type of energy itself will not affect the user's purchase decisions, the key lies in the use experience what new energy car could take to them. Therefore, when there is no significant difference between new energy vehicles and fuel vehicles in terms of experience, quality and price, it will usher in a huge development opportunity. Range and charging time are key factors in the experience of new energy vehicles.

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Based on the sales volume forecast of the entire passenger car market, the acceptance conditions of the new energy vehicles by the users, and combined with the expectation of the power battery performance and the technical indexes of new energy vehicles in combination with relevant industry planning, technical route and development goal, we made a forecast for the sales volume of new energy passenger vehicles: by 2028, the sales volume of new energy passenger vehicles will reach 11.04 million, accounting for 29.1% of the total passenger vehicle market.

●Who will be the main consumers of automobiles in the future?

With the end of 2018, the last group of people born after 1990 formally reached the legal age, indicating that the new generation of young consumption power begins to rise. In the age structure of automobile consumption, 79.7% of the car buyers are under 40 years old. The post-80s generation, aged 30 to 39 years old, has obviously become the backbone of the society and the main force in the automobile consumption market, accounting for 53.2% of the total car purchases. The post-90s generation is in the growth stage of their profession, and the post-90s generation has gradually entered the workplace, and the demand for automobiles still needs to be developed.

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We've classified the user attributes of different age groups: Successful and easy group "before 70s generation", Mature and steady group of "post- 70s generation", Family-centered rational group of "post-80s generation", Pragmatic balancers of "post-90s generation",  Liberal and displaying group of "post 95s generation", each group has different consumption characteristics.



汽车之家

汽车之家

汽车之家

汽车之家


汽车之家

According to the data of Chinese automobile consumers, the group under 30 years old is becoming a new force in the market. Young users' cognition of automobile is gradually moving away from the concept of "large assets" to "ordinary consumer goods". Their pursuit of life and consumption concept will drive the brand re-engineering and product layout innovation of automobile manufacturers. In addition, the younger users will also motivate dealers, after-market and other parties to focus on a more comprehensive "car life". Automobiles have gradually descended from high-end consumer goods. The open platform and rich interactive experience brought by the Internet are making automobiles more and more humanized. These Internet experiences have profoundly affected consumers.

●How does the brand enhance its influence and reputation?

In terms of nationality, Chinese, German and Japanese brands are most popular among consumers. In terms of scale alone, Chinese brands enjoys the largest sellers in the passenger car market, with a market share of nearly 40%. However, in the blockade of German and Japanese cars with strong endorsement, the market share of Chinese brands has not exceeded half in the past decade. Especially in the downturn of the car market since 2018, Chinese brands "hurt" the most. Foreign brands continue to promote products in the compact and small car market, and squeeze the market space of Chinese brands by expanding their market channels and lowering product prices.

汽车之家

In the Autohome brand matrix, the brand awareness index monitors the product awareness and enterprise awareness data of specific brands, and comprehensively monitors the consumers' awareness of concern for enterprises and products through sub-indicators such as enterprise science and technology, brand culture, quality reliability, operating strength, and so on. Brand awareness reflects consumers' awareness of the brand and many details of the enterprises and products that support the brand image. Brand reputation index is correlative of consumer word-of-mouth, which reflects consumers' favor and trust in the brand. Compared with cognition, reputation has more influence on brand value and is more difficult to obtain.

With half a year as a monitoring cycle, the recognition of various automobile brands has shown a different trend. Compared with the overall performance of mainstream foreign brands, the competitiveness of Chinese brands in terms of consumption cognition is dropping off. It tells that in the downturn consumer market, the endorsement of a brand has a very large impact on consumer choice.

Quality, word-of-mouth and service make up the trident to enhance the brand reputation. According to the user feedback of Autohome survey, in terms of automotive product power, high product quality, reliability and durability are most attractive and impressive to consumers, accounting for up to 80%. Secondly, the accumulated reputation of users, the perfection of pre-sale and after-sale service network, as well as the automobile technology also impact customers, accounting for more than 40%.

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According to the act of destroying the brand image in Autohome survey and user feedback, poor maintenance, repair and other after-sales service quality is the most destructive. Unfriendly pre-sale/after-sales service attitude is also harmful. Brand negative news caused by product quality, service quality and other rights protection events frequently exposed will also have negative impact on the brand, accounting for more than 40%.

In addition, there is a phenomenon worthy of attention: startups have been earning market attention in recent years, and some vehicle companies even often appear in hot search list on the media. Therefore, users are also paying more attention to emerging brands year by year. According to Autohome user data, the number of people following emerging brands rose from 14.681 million in 2016 to 76.369 million in 2018, which has more than quadrupled in two years, and users' interest in emerging brands has increased by year.

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How to gain user trust? The top five key factors are "stable quality", "high safety", "good performance", "convenient and thoughtful service" and "continuous operation", which are also the "basic skills" that any startups must cultivate. The vast majority of vehicle startups are making blade electric cars, so they face the same problems as other traditional brands, especially the two major problems endurance and charging, which are the two factors that users pay most attention to when they buy cars.

●What kind of products do users need?

The development of "intelligent, network-connected, electric and sharing" in the automobile industry is more driven by the supply side in a top-down manner. From the demand side, users are also very concerned about the development direction of these products, looking forward to the automobiles to open up a full-scene and full-link smart travel life.

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What should cars look like in the next five years? It is not only a question that vehicle companies endeavor to answer, but also a topic that the automobile users are interested in. Research shows that more reliable, more economical and safer quality are still the main demands of users in the medium and long term.

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As for type of power, 50.4% of the users prefer to buy new energy vehicles, but the actual sales volume of new energy vehicles in the overall market accounts for only about 5%, so the demand has yet to be vigorously excavated and met. In addition, according to the 2018 New Energy Survey of Autohome, as many as 70% of consumers are considering new energy vehicles. Though sales of new-energy vehicles  is booming, this year, consumers' acceptance of new energy vehicles has significantly reduced, which is related to the negative public opinion caused by the recent frequent spontaneous combustion accidents of new energy automobiles. In order to enhance consumer trust, vehicle companies need to pay more attention to the quality of products, establish plans to deal with public opinion crisis, and build up consumer trust through effective brand publicity.

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According to the Autohome research, 50% of the pre-purchase users prefer SUV. SUV has large space, sufficient power and better styling, so it complies with the characteristics of the buyers and satisfies their demand for cars. SUV is indeed a good choice for the current actual car environment in China. But since 2018, the downturn in the automobile market has slowed down the pace of SUV, and its share in the passenger car market has also dropped off. SUV has not been able to shake the position of the saloon car market. The choice of users deviates from the current situation of the market, which indicates that the potential growth momentum of SUV is still strong. If the SUV can further enhance the product power, optimize the product layout and marketing strategy, it will compete with the saloon car with better strength.

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●What is the user's service requirement?

The boom of mobile Internet has promoted the transformation of many industries into Internet and e-commerce. The automotive industry is also in the midst of change, and automobile e-commerce companies have also restructured the process and purchase methods of automobiles. How do users choose between traditional car purchase and new service model? According to the survey data, more than 60% of the users tend to the traditional car purchase mode. Because of the complexity of automobile products and car inspection, the users have some concerns about the online vehicle reservation and delivery, which leads to their lack of interest in the new car purchase mode. Relatively speaking, the younger the user group is, the more receptive the new car purchase mode will be.汽车之家

Automobile finance has become an important profit sector in the automobile industry chain. According to the survey data, 30% of the car buyers used financial loans when they bought their cars, while 74.4% of the future car buyers accepted financial services. Based on the survey data, the penetration rate of auto finance is about 30%, which is far lower than the user's acceptance of financial services of more than 70%. On the one hand, compared with the acceptance of users, there is still a lot of room for growth in financial service; On the other hand, the auto financial service providers also need to optimize the financial products and improve the service to further improve the financial penetration.

汽车之家

Nowadays, the automobile products are becoming more and more mature, but the public opinion crisis frequently appears in the consumer service. Obviously, the current level of car purchase service has lagged behind the market development level and the needs of users. We carry out the service trust and satisfaction research on 13 items within the four modules in the service of users buying and using the car before entering the store, when selecting the car, after selecting the car and after-sale service. Overall, there is still much room for users to improve their trust in the services of manufacturers and dealers. Among them, users trust the most in the quality of car delivery, follow-up protection and store reception, but less in the quotation and the financial plan, so efforts should be made to improve the quality and transparency of these services.  

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● Core insight

From the China Automobile Consumption Trend Insight Report, we can draw a lot of important information and judgment: as a whole, the passenger car market in China still has a large growth space, and the consumption potential of new energy vehicles is great; At the level of users, the needs of various user groups are obviously different, so we should optimize the products and refine the selling points according to the differences of users' characteristics and needs. At the brand level, attention should be paid to the building up of brand awareness and reputation, and new brands should focus on enhancing product strength to improve customer trust; In terms of products, users are rational and forward-looking, and the current product demands are pragmatic, mainly considering quality, safety and economy, while in the future they expect intelligent travel in full scenes. In terms of service, economy and timeliness are the focus of users, and young users have a higher acceptance of the new service.

Under the impact of the downturn of the automobile market, the wave of new technology revolution and the upgrading of consumer demand, the automobile industry is facing profound changes and restructuring. With the rise of new user groups, consumers' awareness of the value of automobile products and consumer behavior and ideas are constantly upgraded. Therefore, the supply, production, channels and the service will all undergo a comprehensive technological upgrading and restructuring. The understanding and excavation of consumers' needs is very important for the design and development of automobile products and the spread and promotion of automobile brands and products. It is hoped that all kinds of enterprises at the production end and the channel end can keep pace with the changing of consumer demand, provide products and services to meet consumer demand, and gain advantages in the fierce competition. (Article/Autohome Du Junyi)


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