Late-arriving European brands in China such as Renault, Fiat and Jaguar will find it tougher to get established amid the market’s slowdown. There is, however, reason for them to be optimistic because Chinese customers have very little brand loyalty.
Boston Consulting Group studied the purchasing habits of 2,400 car owners and found that three-quarters are planning to switch brands when they buy their next vehicle.
Marco Gerrits, who is head of BCG’s automotive practice in Greater China, calls it the “great brand migration.”
His advice to carmakers is simple. Profits are shifting to aftermarket services, so stop focusing solely on bringing new models to market, building capacity and expanding dealer bodies and instead focus on the end of the value chain, where it can interact directly with the customer and foster loyalty.
“We need to start thinking much more about how to build up the downstream side of the business -- how do I get more control over the new profit pools that are coming like financing, used cars, insurance. And that has not yet been sufficiently addressed,” Gerrits said. “The automakers are too slow, but there are also a lot of regulatory hurdles in place that don’t make it easy, so copy-pasting concepts from the rest of the world doesn’t really work.”