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NEV owners splash out on consumer services

By LI FUSHENG | China Daily | Updated: 2023-04-03 09:38
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Customers inspect an EC6 SUV at the Nio experience center in Hangzhou, Zhejiang province, in 2022. [Photo by LONG WEI/FOR CHINA DAILY]

Nio, Xpeng and Li Auto drivers spend heavily on eating out and travel

China's new energy vehicle owners, especially those of premium startup marques, tend to spend more on service-based activities than those who drive gasoline vehicles, according to a recent report by Japanese advertising and public relations company Dentsu and China-based marketing group MaLogic.

For those who drive a Nio, Xpeng or Li Auto vehicle, around 30 percent of their transactions were made in restaurants, coffee shops or for entertainment and travel, according to the report.

In comparison, it was 17 percent for owners of international gasoline car brands in the country.

The figures were based on an analysis of statistics from Union-Pay from 2021 to 2022, the report said.

NEV owners not only made such purchases more often, but also spent more money on them overall.

Up to 16 percent of their available budget was spent on experiential shopping, more than double those of international premium car brands including BMW and Mercedes-Benz.

"Increasing demand for individualized experience calls for service at an entirely new level and turns the quest for experience into an aspiration in itself," said Eliza Wong, CEO of MaLogic.

She said the combination of Chinese electric vehicle drivers' purchasing power and experience-based purchasing has the potential to disrupt the long-established perception of premium in the automotive industry, which has long been defined by such brands' heritage and origin.

For quite a long time, recognized premium automotive brands in China have all been international, mainly from Europe and especially the German trio of Audi, BMW and Mercedes-Benz.

The report said Nio, Xpeng and Li Auto are attempting to establish themselves as premium brands in the NEV segment.

The average price of their models stands at 394,000 yuan ($57,463), around 20,000 yuan more than those of international premium rivals.

Deric Wong, CEO of Dentsu China, said Chinese consumers are on a transformative path of their own, adding that they prefer products, services and experiences that complement their lifestyles.

He said automotive brands need to focus on both their products and creativity to stay connected with existing and potential customers to align with evolving mindsets, values and behaviors of customers in China.

"The Chinese automotive industry, as it matures, will become a much more competitive environment, with disruptions in supply chain and technological advancements," said Deric Wong.

"Automotive brands need to make that distinct differentiation and create a connected and loyal consumer base as the EV space becomes more crowded."

Many international brands that have long dominated the Chinese vehicle market have come under significant pressure as they lose market share in the burgeoning EV segment.

For the first time in China, a local brand — BYD — sat atop the list of carmakers by sales last year by dethroning FAW-Volkswagen.

The report said those traditional international brands and Chinese companies, especially startups, are competing for buyers with two opposing concepts.

While the international brands tend to focus just as much on the car as they do in the age of gasoline vehicles, Chinese NEV companies stress the needs of individual mobility by introducing disruptive technological solutions to offer customers luxuries they've never seen before or even expected from vehicles.

So far, local NEV makers have gained an upper hand. Statistics from the China Passenger Car Association show that around 6.5 million EVs and plug-in hybrids were sold in 2022.

Of them, the absolute majority of the top 10 popular models were Chinese vehicles, with Tesla's Model 3 a rare exception.

"There is an irreversible shift from conventional fuel-powered vehicles to electric vehicles taking place, where Chinese brands have taken an early lead," the report said.

It added that there are currently more than 50 active brands in this market, offering consumers more than 120 EV models.

They will be joined by another 100 NEV models, most of them EVs, this year, according to Zhang Yongwei, secretary-general of the China EV 100, based on its survey.

He expects NEV sales in China to reach 10 million units this year.

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