car buyers rank the Internet as a quality source of information prior to a purchase, and that close to 25% see the Internet as credible when deciding which car to buy. Auto shows are also having a strong influence on buyers evaluating car brands and models, scoring close to 30% in terms of both credibility and quality. Marketing channels such as sports sponsorship, billboards, radio or TV commercials, and dealer promotional activity achieved scores as low as 5%. Dealers did poorly in the recent TNS survey, with less than 15% of car buyers seeing China's car dealers as credible or informative factors in buying a car.
If car manufacturers are unsure as to how they can ever influence networks of families and friends in a country of 1.3 billion, they can at least turn to the Internet for help. China's car buyers rely heavily on Internet content as a source of purchasing information, with more than 40% ranking the Internet as "extremely important" or "very important" in making a decision. The Internet is making the process of car purchasing increasingly transparent for China's consumers - in the same way it has done for car buyers in more developed car markets. Chinese consumers use the Internet extensively for pre-purchase information, and actively browse auto websites, read up on news about brands, compare prices or join web-based discussions.
Friends and acquaintances again topped the list when it came to identifying the specific reason Chinese car buyers choose a particular dealership. More than 25% of car owners said this was the most influential factor, and less than 6% of car buyers felt they received good advice at a dealership. Klaus Paur added: "This shows the obvious need for China's car dealers to improve their service quality. In a market where car buyers rely to a great extent on recommendations from family and friends, each individual dealership experience becomes critical, since positive word-of-mouth will help to bring new customers into the showroom. China has become one of the major car markets in the world and has changed from a seller's to a buyer's market. With consumers empowered by an ever-widening range of vehicles to choose from, a competent performance by the dealer at the point of sale will help secure a sale. But right now, China's car buyers have little trust in China's car dealers."
The TNS research pointed to a distinct lack of experience in China with cars, as evidenced by the fact that a majority of consumers surveyed were first-time car owners. Chinese car buyers on average consider three brands before they buy and are likely to visit each dealership for the brand before making a purchasing decision. For example, in the mid-size segment (comprising 422 respondents within the 1041 sample), 2.9 brands were considered before a purchase and the number of dealerships visited was 2.7. This is a more intensive process than is seen in mature markets - where the average is less than 2.0 brands considered.
TNS research showed that while 25% of car buyers had access to finance during the purchasing process, very few took advantage of this resource. The survey found too that car financing is not yet perceived by customers to be important, and is not yet having any meaningful impact on customer retention.
When it comes to brand loyalty, the survey showed that owners of Chinese cars are less committed to their brands than the owners of foreign brands. Some 47% of those owning non-Chinese brands felt a strong commitment to the brand they had purchased, compared to 24% among owners of Chinese cars.
Dealers of Chinese brands have a higher probability of losing their customers than dealers of foreign brands. This is because the Chinese brands perform poorly in terms of the degree of satisfaction a buyer has with a car dealer, prospects for second purchases, and the likelihood the dealership will be recommended to others. However, foreign brands should not be complacent. The majority of foreign-brand owners are also somewhat disloyal to their dealerships, just not to the same extent as Chinese brand owners.
