Increased diversity of automobile consumption policies to increase market space

In recent years, there have been many changes in the circulation and consumption of the Chinese auto market. The growth rate of new vehicles has declined and the used car market has entered a new stage of growth. The high-end trend of consumption is also presenting some new changes. Imported models are moving toward the direction of intelligence and green.

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Recently, at the 2018 China Auto Forum sub-forum, the guests and experts and scholars expressed their views on current consumption and trends of the Chinese auto market.

Policy changes open up more space for automobile circulation

As a strategic pillar industry of China, the automobile industry has a pivotal position in the country's social life. In recent years, automobile consumption has gradually increased.

At the forum, Xiao Rongchen, Director of the Policy Department of the Department of Market System Development of the Ministry of Commerce, pointed out that the characteristics of the new normal economy have performed very well in the automotive market. The shift from the slowdown in the growth of new car sales to the growth momentum reflects the fact that the industry has accelerated the structural reforms on the supply side.

In 2017, the Ministry of Commerce issued the "Administrative Measures for Automobile Sales" (hereinafter referred to as the "Measures"). The "Measures" has a landmark in the development of the automobile circulation system in China. The new automobile sales management measures have broken the single system of car authorization and are fundamental to the changes brought about by China’s auto market. In the coming period, the system with the authorization system such as the 4S store as the main body will still exist, and after breaking the authorization, this diversified sales system will promote the coordinated and sustainable development of the auto market, and will bring a steady stream of momentum and vitality. The issuance of the "Measures" is to speed up the construction of a shared, conservation-minded, socialized automobile system and open up space for various forms of sales of e-commerce auto supermarket auto stores.

According to reports, the future automobile market circulation will change from the self-built and self-use to the characteristics of co-construction and sharing. Single-shop single-products will change to multiple stores and multiple products. At the same time, car manufacturers or OEMs can sell their cars and products through multiple channels, while dealers can sell multiple brands of cars at the same time. In this way, consumers can purchase cars through multiple channels and enjoy richer and better social services.

Xiao Rongchen pointed out that advancing the construction of a shared automobile system is conducive to the center of gravity of the automobile circulation system. With the accelerated development of urbanization in the country, rural areas and third- and fourth-tier cities have very large car consumption potential. The main purpose is to resolve the continuous sinking of the automobile circulation system and let the potential become the real driving force. This is of great significance to the development of new energy vehicles, including automotive e-commerce.

“Although the auto market has slowed down, it is still stable. China’s auto market has a relatively large base. Even if it only has a 3% or 4% growth rate, the incremental part is very huge. I believe that the development of the auto market will do It is getting bigger and bigger." Xiao Rongchen said.

Imports of new energy vehicles will gradually increase

The data shows that from 2017 onwards, the auto import market is showing a recovery growth trend, and it remains stable overall. Despite the apparent continuous decline in 2015 and 2016, the analysis of the reasons is not a decline in the overall market demand. The domesticization of some popular models is an important reason for the decline in the total number of imported vehicles. In 2017, as the pace of localization slowed, the total volume of auto imports returned to the 1.2 million units.

Jia Wei, chairman of China Imported Automobile Trading Co., Ltd., analyzed the current consumption trends and consumption structure of the imported car market are consistent with domestic cars, and they are all processes of continuous structural upgrading. At the same time, the B-class and C-class vehicles are subdivided. The share will increase significantly, and the share of luxury brands, including new energy, will also increase. Parallel imports will continue to maintain rapid growth. Parallel imports will mainly supply high-end, personalized products to the market. The number of new energy vehicles imported will gradually increase in the next two years.

According to Jia Yu, there has been a rapid increase in the support of national policies since 2014. Parallel import accounted for only 7.7% in 2014 and 14.2% in 2017. With the reduction of future tariffs, this situation will continue to expand. However, he believes that parallel imports will not expand indefinitely after reaching 20%, because there are still some restrictions on some sources, including some supply prices.

In recent years, China's automobile parallel import pilot has achieved significant results. Up to now, there are 17 provinces and cities, 20 ports, and parallel import pilots. In 2017, it reached 136,000 vehicles, an increase of 103% year-on-year. Under the premise of pressure on foreign trade and slower economic growth, parallel importation can rise suddenly and is inextricably linked to policy building. Xiao Rongchen said that as the conditions mature, the scope of parallel import pilots will gradually expand, and with this replicable experience to speed up replication promotion, parallel imports should be able to achieve greater development. Parallel import embodies the spirit of supply-side structural reforms. It not only satisfies diversified and multi-level consumer demands from the source, but also has a stimulating effect on the entire automobile market. Let the reform of the auto market return to a rational return.

On the export side, Zhang Zhenhua, vice president of Greater China for Nielsen, believes that although the preparation of Chinese companies is much ahead of foreign car companies, the price is always low because of insufficient brand power. In recent years, as Chinese brands have stepped up to go faster, more and more manufacturers have gone out, and they are getting faster. There are indeed great opportunities. For this reason, in the process of going overseas, Chinese companies should unite together. Win the market.

Driverlessness is the main factor in disruptive change

When talking about the issue of a trend change, Kang Bohan, a partner at the Greater China Region in Roland Berger, pointed out that there will be four trends, namely MADE, that will have a profound impact on the automotive industry in the future.

Among them, M stands for mobility, but also for consumers and owners, indicating that this change from having a car to a car is an increasingly common occurrence. A means automation, which means that people have more and more opportunities to drive. D stands for digitization, and every car and service that comes with the car will become part of the Internet. E stands for the trend of trams. Trams will have a tremendous impact on the world and will bring drastic changes to the industry, which will also change the performance of the car. When these four major trends are combined, it is what we call a subversive environment.

Kang Bohan believes that the future of automotive autopilot will provide a service, and it will be cheaper, and it will be much cheaper than the current drip taxi. This kind of shared service will be a kind of social expectation.

However, according to statistics, not everyone likes auto driving. Automated driving in the Indian market is not advancing quickly. And American consumers, in their choice, may prefer not to use self-driving vehicles to drive, especially in cities with a high population density.

Kang Bohan pointed out that in emerging economies, China and India all reflect different situations. Consumers may want to buy autonomous vehicles and they also want to own a car. So for auto manufacturers, How to provide a complete consumer solution is particularly important in light of the needs of the market and the attitudes of consumer groups, as well as the location and frequency of use of different consumer vehicles.

Now, some automobile manufacturers can already manufacture or develop a stereotyped and customized vehicle model for a specific industry. These companies do not need to consider the use of traditional sales channels to promote their own customized vehicles. Instead, they will specialize in the design and production of specific industry needs.

Under such a business model, the company's supplier chain will become very simple and save retail channels. Only such a demand is expected to reach 25 million vehicles in 2025.

This also indicates that a new model has emerged in the price strategy of corporate products, and prices will be 50% lower than traditional retail channels. Therefore, China's auto manufacturers must have sufficient pre-judgment, manage their own teams on the premise of low cost, strengthen operations to rationally distribute investment, and increase investment in new energy vehicles.