Chinese Car Buyers Embrace Online Sales, Dealers Still in the Loop

Car Scoops. January 11, 2015

E-commerce is nothing new, especially in what is probably the world’s most connected country: China. The thing is, Chinese are embracing online sales for new cars, too – and that’s good for business.

Local automaker Geely estimates that it has sold nearly 3,000 units in 2014 online five years after first launching its e-commerce website. “The impact of Internet firms has been a major success for the company”, company spokesman Ashley Sutcliffe said.

Paul Hu, Volkswagen Group China’s chief marketing officer for Greater China and ASEAN, is even more buoyant: “E-commerce in the automotive market is taking off”, he told Wards Auto. “In my personal opinion, online sales in the total car market in China will account for 10 percent in the near future.”

Still, traditional dealers are not left out of the game. One of VW’s joint ventures, Shanghai Volkswagen, is selling cars online through a number of websites; customers place the order in one of the sites but have to close the deal and pick up the vehicle from a dealership.

Kyle Dickie, CEO of dealership best-practices consultancy Sewells Group, thinks that “there is some disruption to come to the distribution model, but it is not imminent. In China, there is an unusually high level of trust still placed in the sales consultant. Consumers want to interact face to face.”

The “disruption” mentioned by Dickie are smartphones. Right now, China is estimated to have more than 500 million smartphone users who, naturally, use their devices buying stuff online. Beijing-based iResearch forecasts that 2014 online retail sales in the country increased by 45.8 percent to 2.76 trillion RMB (US$444 billion).

“Empowered with technology, consumers of mobility services are likely to make choices other than what the automakers and their dealers are offering today”, commented Bill Russo, the managing director of the Gao Feng consultancy firm.

In other words, e-commerce may bring customers to the dealerships – they just might not be interested in the same vehicles the dealer and the brand want to promote.

http://www.carscoops.com/2015/01/chinese-car-buyers-embrace-online-sales.html

Bill Russo to Brief Investors on the Internet of Vehicles

Coleman Research Group Conference Call

TOPIC:

Building the Internet if Vehicles and Related Smart Car Technologies in China

Date: Tuesday, January 13, 2015

Time:  10AM EST, 11PM China

Venue:  Conference Call

Click here to register (sponsored by Coleman Research Group)

• Traditional auto ownership model re-shaped by rapid urbanization in China
• Disruption of the automotive value chain
• New mobility concepts changing traditional business models
• Unique context of China’s urban transportation challenges
• High rate of adoption of mobile device connectivity driving need for connected car technologies
• Need for OEMs to develop strong relationships with telcos and technology players
• Companies: Ford (F), General Motors (GM), Volkswagen (VOW), Toyota (TM),Honda (HMC), Fiat Chrysler (FCAU), Nissan (NSANY), Hyundai (HYMTF),Daimler AG (DDAIF), BMW AG (BMW), Continental AG (CON), Valeo (EPA),TRW Automotive (TRW), Mobileye(MBLY), Uber, Yidao, Relay Rides, Baidu(BIDU), Alibaba (BABA) and Google (GOOG)

China is the world’s largest auto market and also has highest number of internet and smart phone users which will likely make it an innovator and incubator of smart car technologies. China’s urban transportation challenges, the high rate of adoption of connected mobile devices, combined with the rapid and aggressive introduction of alternative mobility and vehicle ownership concepts will ultimately compress the time needed to commercialize smart, connected car technologies and services.  Investors, automakers and dealers are optimistic that these developments will dramatically revolutionize the Chinese auto market. As a result, OEMs are investing rapidly in the marketplace to gain first mover advantage in the most promising auto market in the world.


ABOUT OUR EXPERT:

Bill Russo is President of Synergistics Ltd and Managing Director and Automotive Practice Leader with Gao Feng Advisory Company, Ltd. He has more than 25 years of experience in the auto industry. He was formerly the VP of Chrysler Northeast Asia, where he successfully negotiated and secured government approval for six vehicle programs with three different Asian partners. In this time period, he launched a regional holding company as well as two distribution companies and oversaw the industrialization of the first Chrysler and Dodge-branded vehicles in Asia. He holds a U.S. patent for his innovative efforts towards reducing automotive new product development cycle time and is a published author and opinion leader whose viewpoints have appeared throughout several media outlets.

How Connected Mobility Technology Is Driving The Future Of The Automotive Industry

GlobalBusinessProfessor.com

Click here to view the seminar given by Bill Russo

We are pleased to share with you a seminar on the topic Reinventing Mobility in the China Context: Building the Internet of Mobility & Related Smart Car Technologies. With the auto industry developments and the increasingly prevalence of the wireless internet and mobile devices, we expect that the Internet of Vehicles will create discontinuous opportunities for product and business model innovation.

We believe the conditions in China – the world's largest auto market and the market with the largest number of both internet and "smart phone" users – will likely make it the incubator for rapid commercialization of such innovations. China's urban transportation challenge, the high rate of adoption of connected mobile devices, combined with the rapid and aggressive introduction of alternative mobility and vehicle ownership concepts from new entrants, will ultimately compress the time needed to commercialize smart, connected car technologies and related services. Such developments will dramatically alter not just the feature content of vehicles, but may also usher in a revolution to the business model of the automotive industry – where a model focused on "users of mobility services" could emerge as a real alternative to the traditional model of "car ownership".


Click here to view the presentation slides

Click here to read the associated paper