A flying dance was among the highlights of the previous Beijing International Automotive Exhibition. This year more than 2,000 exhibitors from 14 countries and regions will showcase 1,134 vehicles at the show that runs until April 29. Chen Xiaogen / For China Daily

Record sales in March, but marketing crucial as competition heats up and more restrictions loom, Li Fangfang reports

Although more local governments are likely to implement policies to curb new car sales, the Chinese auto market still has great potential for growth in the long run and even in the next two years, said industry insiders.

The bright outlook makes China a top investment destination and a focus of operations for more global automakers.

Yet they need to adjust their marketing strategies to meet the hot competition and secure tomorrow's buyers today, according to recent industry surveys.

In March, China's automobile sales hit a record-high 2.17 million units, said the China Association of Automobile Manufacturers.

The strong demand helped first-quarter vehicle sales jump by 9.2 percent year-on-year to 5.92 million units.

The almost double-digit growth swept away worries of an uncertain future following a nearly stagnant market in 2011 and 2012.

But it is not all open road and sunny prospects for automakers.

In March, Hangzhou became the seventh city in China to strictly control the number of new vehicle license plates following Beijing, Shanghai, Shijiazhuang, Guangzhou, Guiyang and Tianjin.

"As more than 10 cities are expected to soon implement similar restrictions on vehicle purchases due to traffic and environmental considerations, the buying spree before the policies take effect will add at least 500,000 vehicles in sales this year," said Rao Da, secretary-general of China Passenger Car Association.

"This helps promise high growth in the passenger vehicle market this year." He predicted an increase of 10 percent in China's overall automobile market and 13 percent in the passenger vehicle sector for all of 2014.

Namrita Chow, principal analyst with Shanghai-based consulting firm IHS Automotive, said restrictions in more cities in China will certainly slow growth.

IHS Automotive forecasts that sales of light vehicles, which include passenger and light commercial vehicles, will gradually cool in 2014.

"In 2013, we saw a 15 percent growth in light vehicle sales as the market returned to organic growth," said Chow.

"As restrictions on new vehicle purchases and other trends develop across China, we see light vehicle sales growth at 8.86 percent in 2014 and 7.23 percent in 2015 and so on, with annual growth rates slowing to 2.5 percent a year by 2020," she added.

Short-term potential

A recent online survey by Nielsen, a leading global provider of information and insight into what consumers watch and buy, found that 78 percent of consumers interviewed in China plan to buy a new or used car in the next two years, indicating a great sales growth potential in the short term.

According to the survey, Latin America, the Middle East and Africa and the Asia-Pacific region will have the strongest demand. Some 72 to 75 percent of those surveyed said they want to buy a car in next 24 months, while the figure was 56 percent in North America and 50 percent in European countries.

From a country perspective, China is sixth among the 60 countries surveyed in terms car-buying intent, whether new or used, following India, Brazil, Indonesia, Thailand and Mexico. But China is the market with by far the most intensive competition as almost all international automakers have ambitions to grab a bigger share and most have already started local production.

So how to find untapped potential through marketing and communication strategies is crucial to winning more new and discerning consumers.

"Linking automotive demand with consumer sentiments and media habits is vital to developing marketing strategies that connect the right Chinese consumers with the right automotive brands," said Alice Yu, vice-president for the automotive business at Nielsen China.

"As expected, China and other major developing countries represent large areas of growth opportunity for the industry, but capturing this opportunity depends on how marketers successfully identify, understand and effectively connect with buyers' needs and desires.

" Online platforms, in particular, present unique opportunities to reach these buyers," Yu explained.

The Nielsen survey polled more than 30,000 Internet respondents in 60 countries to identify where automotive demand is greatest and to reveal the emotional as well as the financial motives that are most influential in driving new and used-car purchase intent.

The findings are integrated with an 11-country media study designed to uncover outlets where automotive advertising resonates most and which websites that are helpful to car-buying consumers.

New-car purchase intent is still the main theme among Chinese consumers, which puts the country in second place among surveyed countries only following India. In Europe, more respondents plan to buy a used car rather than a new car in the next two years.

"More than 90 percent of the current car owners and 80 percent of the non-car owners in China expressed the purchase intention for a car in the next two year when they could afford it, indicating a very positive outlook for the auto market," said Yu.

"Getting to the heart of what drives purchase decisions allows auto marketers to fine tune their marketing strategies to address the unique needs of buyers," She added.

Emotional aspirations

According to Nielsen's survey, 89 percent of the Chinese respondents say that aside from financial reasons, emotional aspirations also affect their buying intentions.

Buying a car to reflect social status and to fulfill utilitarian needs are both motivators that will spur future automotive demand in China.

Meanwhile, 93 percent of current car owners in China regard their cars as a good friend.

"Automakers are well aware of the power of emotional connections for car buyers, but the key is making sure these messages are clear and resonate through their campaigns to the right audience," said Ganesh Relekar, vice-president for automotive research at Nielsen China.

"If auto marketers know that consumers are driven by status, then sales efforts centered on the luxury car market should be a priority focus. Similarly, with utility-minded, finance-driven or driver-enthusiast consumers, a keen focus on their desires will ensure that marketing strategies are proactive and aligned with their wants."

Online advertising is most helpful to consumers when buying a new car, according to Nielsen's Media Consumption Survey across 11 countries in 2013. Sixty percent of Chinese respondents said that automotive advertising on websites is "very helpful" when considering the purchase of a new car, compared with 45 percent who say the same about advertising on TV, followed by 34 percent for magazines and mobile platforms, 27 percent for newspapers and 19 percent for radio ads.

According to Nielsen's study, the websites considered most informative are automotive brand websites, professional product review websites, other third-party information sites and social media.

Forty-four percent of the Chinese respondents find dealer websites most helpful, and about one-fourth say video sites with product demonstrations are most useful.

"Online platforms are developing globally as a space to reach buyers who are actually engaged in (reading) marketing content," said Relekar. "Car buyers also have a propensity toward automakers' sites, suggesting that marketers should be paying significant attention to the effectiveness of these owned assets."

TV, thanks to its wide reach, still enjoys advantages over other traditional media as one of the highly preferred outlets for most kinds of ads, including automobiles.

According to Nielsen's digital service branch CCData, TV ad spending for auto products in China increased 18 percent in 2013. Separately, Nielsen's Brand Effect study shows there is still room for improvement in the overall performance of auto-themed TV ads. Despite the high exposure of TV ads, only 30 percent of Chinese consumers surveyed in Nielsen's Brand Effect Database were able to recall the TV ads, and among them, only 29 percent could recall the brands.

The overall "breakthrough impact" was low at only 9 percent among 57,000 respondents surveyed from April to December in 2013.

"The higher the breakthrough impact score, the better the chance an ad left a memorable impression, which increases the probability that consumers will take action," said Relekar.

"Given the super-cluttered and crowded TV landscape and rising ad spending on TV in today's China, you must know your consumers.

"You have to understand what they watch, what they buy and how one affects the other.

An emphasis on creative differentiation is becoming more and more important to ensure that your advertising campaign is memorable and achieves a strong breakthrough."

Contact the writer through lifangfang@chinadaily.com.cn

(China Daily 04/20/2014 page33)