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A BMW car on perspective during a 2012 Autumn Auto Show in Qingdao, Shandong province, on Sept 14. Huang Jiexian / for China Daily
A Mercedes-Benz sports car during a 6th Hainan Auto Sales Exhibition on Sept 18. Shi Yan / for China Daily
The President and CEO of Mercedes-Benz (China) Ltd, Klaus Maier, recently returned from a outing along a Silk Road in Xinjiang Uygur unconstrained region, where he was tender by a intensity for enlargement in a car market.
“The enlargement of tiny cities there, such as Kashgar, Korla and Kuche, tender me a good deal. we can see many cars pushing on a roads there that we could not suppose years ago,” pronounced Maier.
“We haven’t been there with a stores. However, we can now cruise substantiating tiny dealerships step by step, to follow a customers.”
He also paid a revisit to Mercedes’ dealership in Urumqi, a region’s collateral city, where a play told him that marketplace direct exceeded his expectations.
“Our enlargement rates in these third- or fourth-tier cities are many aloft than that in first-tier cities, yet a vital sales are in large cities,” pronounced Maier. However, he said, “Going to smaller cities is a bottom for a destiny success and long-term development.”
Maier pronounced that from this year, Mercedes is speeding adult a sales network enlargement from a prior devise to supplement 20 to 25 dealerships a year to opening some-more than 40 new dealerships annually.
“By a finish of this year, we will have during slightest 300 dealerships around China. And we are going to some-more third- and fourth-tier cities to find some-more potential,” pronounced Maier.
“Look during these tiny cities, that are not on a network enlargement list today. we cruise we can start to ready for dealership investiture maybe in dual years,” he said.
Mercedes-Benz is not a usually association formulation to try a marketplace intensity in China’s third- or fourth-tier and even lower-tier cities.
Fellow German oppulance car writer BMW Group non-stop a 4S (sales, gangling parts, service, survey) core in Lhasa, collateral of a Tibet unconstrained region, in late August, creation it a initial oppulance car code to enter a area and a initial oppulance code to cover all collateral cities in China’s provinces and regions.
“Although we are confronting many hurdles in Lhasa, that has a tiny ability for oppulance vehicles, we trust that a marketplace will open after we open a 4S store,” pronounced Daniel Kirchert, comparison vice-president of sales and selling during BMW Brilliance Automotive.
“In a final dual to 3 years, many people have been upgrading their vehicles from middle- or even low-end cars to oppulance branded vehicles. So we are assured that after 3 years, business in a Lhasa store will flourish,” pronounced Kirchert.
Statistics from BMW uncover that a year-on-year sales enlargement in fourth- or fifth-tier cities surged by 50 percent in a initial 7 months, that is many aloft than a altogether enlargement of 30 percent in a Chinese mainland.
In 2011, a German code entered 23 new cities and now has stores in 290 cities in a mainland. This year, it skeleton to enter a serve 30 new cities.
By a finish of this year, BMW has set a aim of 350 dealerships in a world’s largest car market.
“Although China’s car marketplace slowed down this year, we won’t change a long-term devise due to short-term marketplace uncertainties. Dealership enlargement is pivotal for a destiny here,” pronounced Kirchert.
Vice-Minister of Industry and Information Technology Su Bo agreed.
He said: “China’s car courtesy will finish a bang over a subsequent 10 years. However, a car zone in third- or fourth-tier cities, and even farming regions, will continue to suffer fast enlargement in a prolonged term.”
Statistics from China Association of Automobile Manufacturers uncover that a share of new car sales in third-tier city markets augmenting from 26.7 percent in 2010 to 30 percent in 2011, while that in first-tier cities forsaken from 35.7 percent to 30.8 percent during a same period.
Analysts pronounced that third- and fourth-tier city markets will be a vital terrain for automakers in a nearby future.
According to CAAM, China’s domestic car marketplace slowed down in 2011, flourishing usually 2.5 percent year-on-year, after engagement an considerable annual sales enlargement of 46 percent in 2009 and 32 percent in 2010.
The slack in a car zone continued in a initial 8 months of 2012, with sum sales of 1.25 million units, adult 4.1 percent year-on-year.
Luo Lei, emissary secretary-general of a China Automobile Dealers Association, said: “Most Chinese people still have a dream of owning a car, generally in smaller cities. The intensity in third- or fourth-tier cities is attractive.
“As consumers who are deliberation their initial car are some-more price-sensitive, a pricing devise in those smaller cities is critical for automakers.”
He suggested that before automakers go to low-tier cities, “they need to have a fast and clever foothold in first- and second-tier cities”.
Cui Dongshu, emissary secretary-general of a China Passenger Car Association, said: “Along with a send of courtesy from large cities to tiny and internal cities, car expenditure energy is also relocating to third- or fourth-tier cities, where car ability is low and sales are high.”
He pronounced automakers need to adopt a opposite proceed toward enlargement in smaller cities.
“We will cruise opening smaller dealerships,” pronounced Maier from Mercedes. “The devise will be really flexible, depending on a distance of a cities,” he added.
Jia Xinguang, an eccentric vehicle researcher in Beijing, concluded that “the crazy enlargement in first-tier cities has ended, while there is intensity in third- and fourth-tier cities”.
However, Jia pronounced that a markets in those low-tier cities will strech superfluity indicate faster than large cities.
“And after automakers have spurred car expenditure in smaller cities, they will face hurdles such as trade congestion,” he said.
Going west
After formerly focusing on vital cities along China’s coastline, oppulance car brands are now bend their courtesy to a abounding opportunities in western regions, where they devise to open some-more dealerships.
Mercedes-Benz inaugurated a new informal domicile in Chengdu, Sichuan province, covering western China, during a finish of August. It restructured a business with 3 other informal domicile this year, in Beijing, Shanghai and Guangzhou for northern, eastern and southern China, respectively, to improved conduct a flourishing series of dealerships.
“Over a years, cities in western China, such as Xi’an and Chengdu, have witnessed thespian enlargement and changing lifestyles that denote a region’s outrageous marketplace potential,” pronounced Bjorn Hauber, executive vice-president of sales and selling during Mercedes-Benz (China) Ltd.
“Although a segment now contributes 15 to 20 percent of a altogether business, it’s some-more engaging that we see a top enlargement rates in a western China market, led by a dual cities.”
According to Hauber, Mercedes’ sales in Chengdu this year grew 60 percent year-on-year, outstripping a marketplace opening in first-tier cities.
This fast enlargement means that a marketplace is some-more critical than ever to a company’s altogether enlargement devise in China, he said. “This, together with a augmenting all-round efforts of a Chinese supervision to serve rise a western region, have compelled us to place an even larger concentration on achieving tolerable enlargement in this informal market,” Hauber said.
Swedish oppulance code Volvo, that was acquired by Chinese carmaker Geely Automobile in 2010, also determined a southwestern sales bend final month.
“We devise to enhance a dealership network from a stream 109 to 250 over a subsequent 5 years, with many of them in third- or fourth-tier cities,” pronounced Ning Shuyong, vice-president of Volvo China.
Toyota’s oppulance code Lexus pronounced that in a initial 7 months, a sales in a southwestern region, including Sichuan, Chongqing, Guangxi and Yunnan, augmenting 55 percent year-on-year to 16,000 units, accounting for 40 percent of a sales in China.
lifangfang@chinadaily.com.cn
(China Daily 09/30/2012 page9)
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