The road to success in China’s Electric Vehicle Market | Wave 3

Dentsu China’s third wave of whitepaper series “The road to success in China’s Electric Vehicle Market”, in partnership with MaLogic and UnionPay Advisor, points to shifting consumer purchase behaviours that reshape the perception of “premium” in the local EV market, and lend insights into factors that accelerates consumers’ path to purchase, and focus areas to achieve the optimal end-to-end customer experience journey. 

Despite a challenging economic context, China’s new passenger vehicle sales in 2022 grew to 23.6m units (+9.5% year-on-year). This is above all due to a remarkable development of the New Energy Vehicle market, which doubled almost in size with close to 6.5m new electrified passenger vehicles sold compared to 2021. Of these, 3 out of 4 were pure battery electric vehicles (BEV).

There is also an irreversible shift from conventional fuel-powered vehicles to electric vehicles (EV) taking place, where Chinese brands have taken an early lead. Currently, more than 50 brands are already active in this market segment, offering consumers more than 120 BEV models. In other words, sustained success ultimately rests with consumers decision on which brand best appeals to them.

The latest findings of the whitepaper series reveal a greater emphasis of Chinese EV brand buyers on experiential shopping (essentially service-based purchases in restaurants and coffee shops, for entertainment, travel, etc.) than buyers of conventional fuel-based cars. It is reported that 30% of purchase activities by users of Chinese startup EV brands Nio, Xpeng and Li Auto are aimed at such ‘experience’ purchases, compared to 17% by owners of international car brands. These buyers of the Chinese EV start-up brands spent 16% of their available budget on experience purchases, more than doubling those of international premium car brands.

Deric Wong, CEO, dentsu China said, “Chinese consumers are on a transformative path of their own, and with Chinese EV buyers coming of age…with more discerning preferences for products, services and experiences that compliments their lifestyles… automotive brands needs to focus both efforts and creativity to stay connected with existing and potential customers to align with evolved mindsets, values and behaviour”.

The latest whitepaper series also highlighted the fast-evolving perception for “premium” in local EV market when the average purchase amount (per payment transaction) for Nio, Xpeng and Li Auto models is slightly higher than mainstream international premium ones (~39.4K RMB vs. ~37.4K RMB).

“The combination of purchasing power and experience purchasing has the potential to disrupt the long-established perception of premium in the automotive industry, long defined by brand heritage and origin”, says Eliza Wong, CEO, MaLogic. “Increasing demand for individualised experience calls for service levels to be at a whole new level and turns the quest for experience into an aspiration in itself.”

“The Chinese automotive industry as it matures, will become a much more competitive environment, with disruptions in supply chain and technological advancements. Automotive brands need to make that distinct differentiation and create a connected and loyal consumer base, as the EV space becomes more crowded.  dentsu is well-positioned, with our accelerated pace to build and grow a sustainable future for the automotive industry by integrating Media, Customer Experience Management and Creative capabilities into consumer-centric, experience-driven products and services for growth.” added Deric.  

As a decades-long partner to auto brands around the globe, dentsu is launching an integrated automotive & mobility offering for China’s automotive internet-of-things (IOT) market to enable auto brands to generate more business value. This approach focuses on leveraging insights from front-end customer experience to back-end enterprise innovations to deliver cutting edge end-to-end ownership experience.

The findings are based on a big data analysis of UnionPay spending of new car buyers between 2021 and 2022:

• 3 Chinese EV start-up companies: Li Auto, Nio, and Xpeng 

• 10 best-selling international JV mainstream brands: Buick, Chevrolet, Ford, Honda, Hyundai, Kia, Mazda, Nissan, Toyota, and VW

• 5 best-selling international JV premium brands: Audi, BMW, Cadillac, Mercedes-Benz, and Volvo