BEIJING: Three-quarters of Chinese car owners, representing a huge market of 90m vehicles, are prepared to switch brands and they are focusing on just a few marques that have built a good reputation for reliability, a new survey has revealed.
According to a poll of 2,400 Chinese car owners by the Boston Consulting Group's Center for Consumer and Customer Insight, nearly 85% of those owning Chinese auto brands say they plan to switch.
But foreign brands can also expect to be affected because 70% of consumers owning foreign "volume" cars – defined as costing between $13,000 and $41,000 – intend to switch, while 57% of foreign premium car owners plan to do the same.
This "great brand migration" will affect every segment of China's auto market, the report warned, and securing customer loyalty will be essential.
Marco Gerrits, the head of BCG's automotive sector in Greater China, said that many automakers had focused on winning over first-time buyers, but now both Chinese and foreign brands should not take their gains for granted.
"These findings suggest that the next great battle in China's car market will be waged over customer loyalty," he predicted.
But a handful of foreign brands – all of them German – stand to benefit from this customer loyalty volatility.
Among those consumers who plan to trade up their Chinese-built volume car to a foreign volume brand, 40% say they intend to buy a Volkswagen model.
And nearly 90% of those who own a foreign volume brand car say they are likely to buy an Audi, BMW or Mercedes-Benz.
"The stakes are particularly high in China because it tends to be a winner-take-all market," said Donald Zhang, a BCG project leader and co-author of the report.
"Chinese car buyers seem to be converging on a handful of brands that have solid reputations for being safe choices," he added.
Data sourced from BCG; additional content by Warc staff