Why Brand Loyalty Is Tough in China’s Auto Market

on September 26 2014 | in Auto Trends | by | with No Comments

BMW HK

A “Great Brand Migration” is sweeping over China, sending drivers searching for brands to meet their growing needs.

A recent report by the Boston Consulting Group reveals that securing brand loyalty is a tall order for companies in China’s increasingly competitive market. With 500 lightweight vehicle models on the market in China today, compared to only 80 in 2000, and a market projected to grow six to nine percent in each of the next four years, China is a place of great risk but great potential rewards for automakers.

According to Xavier Mosquet, a senior partner and automotive expert with BCG, part of the reason that brand loyalty is so slippery in China is because consumers are eager to try the variety of new cars now available to them.

“The future generation wants to experiment and wants to try a number of things, so right now they have less attachment to the brand that they are using, and we’re seeing that across categories, that willingness to try new things,” Mosquet told Luxury Daily.

The BCG study, which drew on interviews with 2,400 Chinese car owners, also found a distinctly upward slant to that experimentation. Drivers increasingly want better, pricier cars.

“Also, we see a very high need to upgrade. The next purchase is likely to be in a higher price bracket, and a brand with more prestige,” Mosquet said. “They’re looking at a jump for their second or third car purchase, and they feel that they can aspire to better, so there’s a lot of trading up happening in that market.”

Consumers tend to fall into two categories: “upgraders,” or consumers who want their next purchase to reflect their heightened status, and “brand shifters,” or consumers who lack brand loyalty and or switch brands because they are dissatisfied with the quality of their purchase.

Overall, domestic brands have a lower rate of customer loyalty; only 17 percent of survey respondents who owned a Chinese car said they would stick with its brand. The study suggests that customer dissatisfaction comes from the poorer services and lower car quality provided by domestic companies.




image credit: bmwhk.com

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