Business / Auto China

Maturing market wants better quality

By Li Fusheng (China Daily) Updated: 2014-09-22 07:10

The report finds that some owners of joint venture volume cars who plan to switch to competing brands in the same category primarily cite concerns over reliability, safety and after-sales costs such as maintenance.

The dissatisfaction is in part due to some multinational joint ventures offering products based on previous-generation vehicles and insufficient investment in quality control, according to the report.

It added that those carmakers might be using lower-quality, less expensive materials and parts, which do not hold up well under Chinese driving conditions.

Premium-car owners

Among premium-car owners, 37 percent said they will buy a competing brand in the hope of having more comfort and better after-sales services, while another 16 percent is planning to choose a super-premium brand as they want more luxury.

The results indicate companies will have to put much greater emphasis on service than they did in the past to keep customers or draw new ones, according to the report.

Gerrits said the situation might improve with many premium car brands lowering prices on vehicles, spare parts and maintenance during the Chinese government's anti-monopoly campaign.

Andreas Klotz, a co-author of the report, said auto brands in the Chinese market remain fairly undifferentiated, which is another reason for lower customer loyalty.

"Companies need a clear picture of which functional and emotional qualities drive the decisions of customers in different segments," said Klotz. "They should create a more distinctive brand identity - something most car brands currently lack in China."

Though it may takes some time to consolidate a brand image, David Jin, a BCG senior partner, said it is worthwhile and rewarding.

"China tends to be a winner-take-all market and Chinese car buyers seem to be converging on a handful of brands that have solid reputations for being safe choices."

The BCG report found that more than 40 percent of Chinese volume-brand owners who plan to trade up to a foreign volume-brand said they intend to buy a Volkswagen model and nearly 90 percent of foreign volume-brand owners who are trading up said they are likely to buy an Audi, BMW or Mercedes-Benz.