LONDON--(BUSINESS WIRE)--Technavio’s latest report on the passenger vehicle market in China provides an analysis on the most important trends expected to impact the market outlook from 2016-2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
Siddharth Jaiswal, a lead analyst from Technavio, specializing in research on automotive manufacturing sector, says, “Electric and hybrid vehicles represent an important segment of China’s passenger vehicle market which is expected to show double-digit growth rates during the forecast period. Matters such as sustainable manufacturing and a cleaner environment have forced the Chinese government to implement stringent emission regulations on the transportation sector. In addition, the Chinese government is encouraging the manufacture and use of electric and hybrid vehicles.”
The top three emerging trends driving the passenger vehicle market in China according to Technavio automotive research analysts are:
- Digitalization of China’s automotive industry
- Domestic OEMs to capture higher market share than international OEMs
- China to become testing ground for autonomous vehicles
Digitalization of China’s automotive industry
China has a well-established e-commerce chain, and customers in that country prefer buying online merchandise. This has encouraged OEMs to leverage the online domain as one of their distribution channels. Digital channels are the primary source of information for many car buyers across the globe, and this is one of the reasons OEMs are focusing on e-distribution channels. However, very few OEMs offer the online facility, but this should emerge as a key distribution channel for OEMs in the future.
Automotive OEMs in China are expected to focus on online retail channels. Such channels enable OEMs to nurture and sustain a direct relationship with buyers. This follows the fact that the majority of new Chinese car buyers use the Internet to research and explore motor vehicles and are willing to book or purchase a car online.
OEMs sell their cars through specific websites or through online portals such as Alibaba, Autobytel, and AutoNation. Customers are provided the option of booking a test drive online, procure the vehicle from the closest dealer networks, or even have cars sent to their home address. Thus, it is fair to assume that online retailing has made the purchase of cars easy and convenient.
Domestic OEMs to capture higher market share than international OEMs
The passenger vehicle market in China is dominated by foreign brands with only 35% of the market share being held by domestic brands. However, domestic players hold a dominant share in the commercial vehicle segment, accounting for 90% of the total commercial vehicle market in 2015.
Domestic brands are steadily increasing their share in the passenger car segment and the domestic OEMs’ share is expected to increase significantly by 2020. The economic slowdown in China eroded the market share of several foreign manufacturers that are experiencing slower growth rates, whereas domestic brand sales grew faster than the overall Chinese passenger vehicle market. “The growth of domestic brands mainly stems from the growth of the SUV segment, particularly the introduction of low-cost SUVs and domestic-brand electric cars,” says Siddharth.
China to become testing ground for autonomous vehicles
With the advent of autonomous vehicles, Chinese automakers in association with the Chinese government are developing expertise in technology to compete with automakers from the US and the EU.
Chinese Internet search giant Baidu is targeting the introduction of driverless cars in the form of shuttles by 2018. The company’s new research center in Sunnyvale, California, US, is piloting new technologies that enable cars to take over critical automotive functions, which will enhance passenger safety. It has already tested two autonomous prototype BMW 3 Series Gran Turismo vehicles on expressways in Beijing’s northern outskirts (as well as inside city limits). Future plans call for testing autonomous vehicles in the US. The company is more focused on tie-ups with domestic Chinese automakers.
Alibaba is partnering with SAIC Motor (the largest passenger car manufacturing company in China) to develop autonomous vehicles. Alibaba plans to integrate its communications, entertainment, mapping, and cloud computing services in autonomous vehicles.
Volvo, owned by Geely, China, is working to launch the most advanced autonomous driving experiment in Chinese cities, including up to 100 automated vehicles with a goal of zero fatalities by 2020.
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