Model: Prices trend­ing lower

China Daily (Hong Kong) - - BUSINESS -

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.

Con­tact writ­ers at wangzhuo­qiong@chi­ and li­fusheng@chi­

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