Business / Auto China

Maturing market wants better quality

By Li Fusheng (China Daily) Updated: 2014-09-22 07:10

Maturing market wants better quality

Auto maintenance staff work at an auto dealership in Zhejiang province. Analysts said dissatisfaction with showroom and workshop services has resulted in low levels of brand loyalty. [Photo/China Daily]

Survey finds three-quarters of owners plan to switch brands

In a maturing market that wants better quality and services, three-quarters of car owners in China are planning to switch brands when they buy their next vehicle, according to a report by The Boston Consulting Group released on Sept 17.

The "great brand migration" will involve some 90 million car owners in almost every segment of the country's auto market, said the report.

"Until now, many carmakers have focused on winning over first-time buyers in the global automotive industry's greatest growth market," said Marco Gerrits, a co-author of the report and a BCG partner who heads the firm's automotive sector in China.

"These findings suggest that the next great battle in China's car market will be waged over customer loyalty."

According to the report, nearly 85 percent of owners of cars manufactured by Chinese companies - which tend to produce the least expensive vehicles - said that they plan to switch brands. Only 30 percent indicated they plan to buy another Chinese brand.

Makers of foreign volume brands could lose 70 percent of their current customers, while around 57 percent of foreign premium car owners plan to switch to a different maker in a segment dominated by a few European luxury brands.

The findings are based on a survey of 2,400 car owners in 18 cities across the country and 36 auto brands, both Chinese and foreign.

Reasons owners of Chinese cars cited for switching brands varied. In addition to those who want to trade up to higher-quality or more prestigious brands, millions intend to switch to a different brand within the same segment because they are dissatisfied with the cars they now drive, according to the report.

Those who drive Chinese cars said engine performance, vehicle handling and quality were the top three reasons behind their intention to change brands. They were also dissatisfied with the purchase and after-sales experience.

There was some good news for Chinese car brands. Current customers are generally satisfied with their comfort, interior design and reliability, and they also regard the cars as a good value.

"The most urgent challenge for domestic brands is to continue improving their vehicles and dealer networks - but without losing their cost advantage," said Gerrits.

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