Model: Prices trending lower
to set up their digital stall. Nearly 500 car dealers have already set up their shops on Tmall.
The implications for the consumer are enormous.
Without middleman, car prices are trending lower. And the online channel offers better auto finance options.
This marks significant progress for China’s vehicle market where numbers tend to be staggering.
Some 29.4 million new cars are forecast to be sold in China this year, up 5 percent year-on-year, according to the China Association of Automobile Manufacturers.
Passenger car sales volume could increase by 5 percent to 25.7 million vehicles this year.
The CAAM said 4.93 million branded passenger cars were sold in the first six months of this year in China, up more than 4 percent yearon-year.
Last year, 10.05 million branded passenger cars were sold, up more than 20.5 percent year-on-year.
The association paints an optimistic picture for the market as more families will make their first purchases and more will replace their vehicles.
Zhang Xiaodong, senior manager of Auto Retail Practice of J.D. Power China, said the alternative sales channels will have a major impact on the automobile manufacturing and trading industry, providing massive convenience to consumers.
However, given the largescale nature of transactions involved, there could be initial difficulties in integrating dealers, traders, suppliers and other distribution channels, said Zhang.
The challenge is how to provide spare parts online for different brands, he said.
Typically, a conventional car dealer provides a combination of services like new car sales, repairs, maintenance and sale of parts. So, the new channels have to build a management and operations system to match or even exceed the current range of services offered by traditional dealers, Zhang said.
“Car dealers won’t be replaced,” he said emphatically. So, the real question is how to update and maximize their services in the right direction.
Dealers have to deepen their customers’ trust through better marketing. Uncomplicated financing and an exchange for used cars are the way forward. From a monopoly-like situation, dealers need to head in the direction of working with car retailers to learn best practices fit for today’s world, he said.
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