Your customers are losing this way

60% of Chinese new car buyers said they considered more than one model before buying a car. Fierce competition makes it more difficult for car manufacturers to win customers than ever before. This is in the medium-sized car segment and the high-end premium mid-size car segment. Especially prominent.

This conclusion is based on the 2011 China Lost Customer Study (ESS) report released by JDPower Asia Pacific. In 2003, JDPower Asia Pacific began researching Chinese lost customers to investigate and analyze the reasons why customers consider a certain model but eventually purchase other models. This year's study they collected feedback from 11,496 car owners who purchased new cars between August 2010 and March 2011, in J. D. According to Power, China's loss of customer research provides crucial insights into customer perceptions of car brands and the reasons for rejection of a particular model.

In 2011, the competition in the passenger vehicle market in China reached an unprecedented level of intensity. At present, the Chinese passenger car market has 94 brands and 471 models to choose from. China's new car buyers have the widest range of options, resulting in a very common cross-shopping behavior. New car buyers have seen three brands on average before buying a car, claiming that the proportion of new car buyers who cross-consult multiple models before buying a car has increased from 50% in 2007 to 60% in 2011. In contrast, only 24% of new car buyers in India claimed that they considered various models before buying a car.

The cross-purchasing behavior of consumers has caused car brands and dealers to find it more difficult to reach sales transactions, and it is even more difficult to retain customers. As a result, automakers and distributors are under tremendous pressure in terms of car pricing and marketing costs.

Jacob George, Managing Director of JDPower Asia Pacific China, said: “Only by understanding why a customer rejects a specific model, can manufacturers identify their weaknesses and make the necessary improvements.”

So, what is the cause of the loss of customers in the end?

The first place in the reason for refusal to buy was price; 15% of customers refused to buy a car because of “too high price”. However, the customer’s refusal to purchase a car model is not due to insufficient payment capacity, but rather to the low perceived value of the car. Of the customers who refused to buy because of price, only 22% claimed that they could not afford a certain model, and 47% said that they thought the model was not worth the price. In addition, 31% of customers who refused to buy because of price indicated that they refused to buy a certain model because other models or brands are more cost-effective.

Not satisfied with the vehicle's exterior design is the second largest reason for rejection. 20% of Chinese new car buyers said they rejected models from European manufacturers because they "did not like designs." To attract car buyers in various regions of China, the European brand needs to continuously carry out design localization. Among the European brands, German brands have excelled in appearance design; French brands in particular need to strengthen the localization of design.

Fuel consumption is also one of the main reasons for refusal; in recent years, the sharp rise in gasoline prices has made the consideration of fuel consumption more prominent. Fuel efficiency has become a challenge faced by almost all automakers, especially for American brands. Twenty-four percent of refusal buyers said they rejected models from American brands because of their expectation of more fuel savings.

Other frequently cited reasons for rejection include "too long to deliver" and "fear of vehicle reliability." Twelve percent of the refusal buyers indicated that they had rejected models from German brands due to “long delivery times”. "Worried about vehicle reliability" is the main reason for customers to reject China's own brand models. More than 10% of customers rejected models from China’s own brands due to “worry about vehicle reliability”.

Dr. Mei Songlin, general manager of JDPower Asia Pacific Research China, said: “In order to make customers favor a certain car and ultimately choose to buy it, car brands need to increase marketing investment and establish a strong brand relationship with consumers. At the dealer level, effective communication is needed to influence the customer’s choice in the car purchase process.”