Finding the Fast Lane: Emerging Trends in China’s Auto Market


Finding the Fast Lane: Emerging Trends in China’s Auto Market

After years of double-digit growth, China’s auto market is slowing down. A cooling economy is one of the primary factors in the deceleration of what remains the world’s largest market for automobiles.

But other factors such as changing consumer behavior and attitudes toward cars are also at play. To better understand what China’s auto buyers think and how they behave when making one of the biggest purchases of their lives, McKinsey conducted an extensive survey of over 3,500 consumers in March.

While the enthusiasm for cars hasn’t entirely dimmed, the survey shows that Chinese car buyers are becoming more practical and less status-conscious than ever. Nearly half of the consumers surveyed see cars as necessities rather than as status symbols. Especially for consumers in high-tier cities, purchasing a new car is now just one option among many for getting around. Alternatives like buying a used car, leasing or renting, and relying on e-hailing and car-sharing services hold increasing appeal. Consumers are also pressing dealers for lower prices on cars after using digital channels to compare offers.

Changing consumer attitudes and macroeconomic headwinds are slowing growth in China’s vehicle market. From 2010 to 2015, vehicle sales in China increased by more than 12 percent a year. Looking out to 2020, however, we project that the vehicle market will grow by an average of 5 percent a year.

While the rate of growth in the overall new-car market is decreasing, the survey highlights consumer segments that could emerge as new engines of growth in China’s auto market. More than half of consumers aspire to upgrade to a better brand when they buy their next car. A majority of electric vehicle (EV) owners is keen to buy EVs again, and the proportion of consumers who say they are interested in buying an EV has tripled since 2011. Consumers have begun purchasing cars online, a trend that is likely to accelerate as digital channels improve. And we see promising growth potential for OEMs, dealers, and automotive-services companies that can provide the maintenance and other real-time car usage information that customers say they want.

Despite the slowing growth in China’s auto market, vast numbers of people are willing to buy new cars and pay for after-sales services. In this report, we describe how consumers’ attitudes toward cars are evolving, and what businesses can do to thrive in this rapidly changing market.

Download the full report

By |April 21, 2016|Categories: Autos, Consumers, Editor's Choice|0 Comments

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