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Business / Auto China

Innovation to keep carmakers ticking

By Li Fangfang (China Daily) Updated: 2014-07-14 07:03

Innovation to keep carmakers ticking

Engineers at the JAC factory in Hefei, Anhui. The Chinese auto industry faces a market growing at 6.3 percent compared to more than 25 percent before 2010. LIU QINLI/CHINA DAILY

Nielsen study charts future growth map for companies

As China's economy enters an era of low growth, the backbone automobile industry will face the new challenges after several years of surging market demand.

In a study based on a nationwide survey of more than 1,000 auto consumers in 10 cities in China, industry data and analysis company Nielsen in partnership with the China Association of Automobile Manufacturers identified key challenges posed by the evolving needs of China's consumers.

"The Chinese automobile industry is seeing a compound annual growth rate of only 6.3 percent today compared to more than 25 percent before 2010," said Dong Yang, executive vice-chairman and secretary general of CAAM.

"Daunting challenges exist for all automobile manufacturers trying to maintain healthy growth in a more competitive market.

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"Instead of targeting volume sales, auto manufacturers should think about achieving profitable sustainability from both a product and marketing perspective, building category leadership by offering the right products to the right consumers through the right channels."

Changing tastes

Though sedans are still the most important vehicle among Chinese consumers, owned by 54 percent of surveyed respondents, sports utility vehicles loom large in the coming years.

According to the Nielsen study, more than half of potential Chinese car buyers surveyed plan to purchase a SUV, compared with only 20 percent among today's car owners.

SUVs priced between 180,000 yuan ($29,508) and 300,000 yuan were favored by 45 percent of consumers, followed by those with a budget between 300,000 and 500,000 yuan.

Multi-purpose vehicles - more widely known as vans - and coupes are also expected to grow in market share, according to the joint report.

Though their share is now very small - 2 percent for MPVs and 1 percent for coupes - they have increasing purchase sentiment among Chinese consumers surveyed. Each is projected to grow to 6 percent of the market.

Coupes in particular are favored by 52 percent of consumers whose car purchase budget goes beyond 300,000 yuan.

"Instead of only viewing a car as a tool for daily commuting, today's Chinese consumers are more sophisticated," said Alice Yu, vice-president of auto consumer research of Nielsen China.

"From a product perspective, we see stronger demand for middle and high-end SUVs and MPVs priced beyond 180,000 yuan, with most potential buyers coming from the current sedan and small SUV owners.

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