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For Americans, you’d be hard pressed to find a consumer who’s never come across those little gold ellipses on products bearing the words Made in China. For Chinese automobile owners, they are now shopping beyond borders for a figurative “sticker swap.”
Chinese auto manufacturers produce some of the most inexpensive cars on the road, and consumers countrywide are now looking to break ties with domestic brands.
According to a new report from The Boston Consulting Group (BCG) titled, The Battle for Automotive Brand Loyalty in China, there is a massive brand migration underway given that 75% of Chinese car owners will change brands when purchasing their next vehicle – an astounding 90 million vehicles.
Even more incredible is the sudden dereliction of nationalist loyalty to domestic Chinese manufacturers. The report found that 85% of current Chinese-manufactured auto owners intend to switch brands, with only 30% planning to repurchase Chinese cars.
“Until now, many carmakers have focused on winning over first-time buyers in the global automotive industry’s greatest growth market,” Marco Gerrits, a BCG partner, said in a release. “…Neither domestic Chinese carmakers nor foreign brands can take their gains for granted. These findings suggest that the next great battle in China’s car market will be waged over customer loyalty.”
Some brands are already poised ready at the finish line to welcome consumers with open arms – and they are mostly German. What’s more, 40% of Chinese volume-brand owners that are trading up to a foreign volume brand said they would buy a Volkswagen, and 90% say they are likely to purchase an Audi, BMW, or Mercedes-Benz.
The reasons for this monumental brand abandonment vary by consumer, but two major motivations stand out. As portions of China’s population continue to experience a socioeconomic upsurge, appetite for prestige rises with it. These consumers are “upgraders,” the report says. The other group, “brand shifters,” will change to a different brand within the same price range.
“Companies need a clear picture of which functional and emotional qualities drive the decisions of customers in different segments of the Chinese auto market,” Andreas Klotz, a BCG project leader and report’s co-author, said in a release. “They should create a more distinctive brand identity – something most car brands currently lack in China.”
If only those little gold ellipses could possess the same recognition power in China as they do in America. Until then, Chinese auto brands will lose Chinese consumer loyalty to European manufacturers if they can’t make their brand identities stick.
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