The slowdown in the auto market is a short-term pain.
Editor’s note: This article is from “Future Car Daily” (WeChat public ID: auto-time), author: Zhang.
Author | Zhang Yi
Editor | Li Huanhuan
Although the Chinese auto market has continued to decline for 15 months, the size of the repurchase group has increased significantly, and the demand for consumer car purchase has become stronger.
Recently, the “2019 McKinsey Auto Consumer Insights” report (hereinafter referred to as “Report”) released by McKinsey, a global management consulting firm, shows that the Chinese auto market is experiencing short-term pain, but the fundamentals of demand are still in place and the future is expected. According to the report, consumers have shown strong potential demand from the incremental and stock dimensions.
McKinsey made the above judgment based on three reasons: China’s lower 1,000-person car ownership, strong consumer demand for private cars, and a significant increase in the size of the repurchase group.
The report believes that China’s current car ownership is still at a low level, taking into account the supporting level of thousands of people and road infrastructure. Statistics show that China currently has about 173 cars, which is equivalent to the United States (837 vehicles), Australia (747 vehicles), Italy (695 vehicles), Malaysia (433 vehicles), Russia (373 vehicles), etc. Compared with the country, there is still much room for growth.
Moreover, Chinese consumers have strong demand for private cars, and the incremental market prospects are considerable. McKinsey’s survey found that 47% of respondents in the 18-24 age group believe that driving pleasure is a major factor in buying private cars, and 32% of respondents believe that owning a private car is a symbol of identity.
In addition, there has been a significant increase in the size of the resale group during the two years from 2017 to 2019. According to the report, among the car buyers, the proportion of re-car buyers has increased year by year, and the stock market is rising.
McKinsey & Company’s 2017 statistics show that the proportion of re-visited car buyers has increased from 10% in 2017 to 30%. Specifically, the group with a monthly household income of more than 48,000 yuan and the demand for new home purchases in first-tier cities are obvious, accounting for 57% and 36% respectively.
On the 10th of this month, Fu Yuwu, honorary chairman of the China Automotive Engineering Society, was also optimistic about the development of the Chinese auto market when interviewed by the media. He believes that it is necessary to rely on the new “troika” to support the long-term development of Chinese cars. In addition to increasing the exchange market, he also said that exports are one of the three troikas that drive the development of the Chinese automobile market.
Fu Yuwu said that the total export volume of Chinese autos is about 1 million, including 300,000 joint venture brands. Among the remaining 700,000, commercial vehicles account for a considerable proportion. This means that China’s auto exports account for only 3% of China’s total car sales, “exports will have a lot of room.” Combining the proportion of auto exports from countries such as Germany and Japan, he expects that “20% of exports will definitely be there.”
In addition, McKinsey said in the report that the consumption upgrade will also bring new opportunities to the auto market. Statistics show that 60% of respondents said that the next car will purchase higher-priced products, but the upgrade range is relatively limited, focusing on the entry-level high-end car price band of 200,000-300,000 yuan.
The report also shows that SUV models are still more popular in the next car purchase demand, about 50% of respondents intend to purchase SUV models next time, mainly 35-65 years old group.
(I am Zhang Yi, the author of the Future Auto Daily, focusing on cars, autopilots and shared travel trends, please feel free to communicate. My WeChat is ro20110723, add a note name, position, company. )
