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Chinese automakers are not to miss chance in 2015

2015-01-20 14:54 Xinhuanet Web Editor: Qin Dexing

China's auto sales continued to expand in 2014, strengthening its position as the world's biggest auto market, according to the China Association of Automobile Manufacturers (CAAM) report released last week.

With 23.49 million units sold approximately, a year on year increase of 6.9 percent, the auto sector seemed to play a big role in boosting the weak macroeconomic environment, the report said.

But automakers are not blindly optimistic about the market in 2015, as there are factors that may drag down the auto sector.

The country's macro economic slowdown may affect residents' income level and their demand for cars while environmental protection factors such as purchase restrictions in many cities may also restrain the market.

Problem with backlog of inventory, especially in the passenger car sector, which increased by around 350,000 units, a rate of 30 percent, far higher than the sales growth rate. Information released by CAAM in October, 2014.

"According to our knowledge, the inventory of domestic automobile is relatively high in 2014, this should trigger an alert in the automobile industry," Executive Vice Chairman and Secretary General of the CAAM Dong Yang pointed out during an interview with National Business Daily at the end of year 2014.

Nevertheless, 2015 holds out its promising side, when automakers could take on a clear vision on the market potentials and trends.

They include:

1. Market and e-commerce integration According to the China automobile industry development prospects report, the industry experts agreed that transformation is the inevitable trend, and the new architecture of Internet economy, intelligent information sharing, business model of automotive e-business is turning into a mainstream trend of automobile industry.

For a long time, auto makers and maintenance enterprises mostly focused on production and manufacturing. Sales and after sales services normally relied on traditional channels. Along with a rise of e-commerce mode in recent years, traditional sales channel will be replaced.

More and more 4S shops have realized the importance of applying WeChart and have developed their own software which contains complex technology, able to provide one-on-one e-maintenance services. By using WeChat services, quality and efficiency of customer service will improve significantly while cost as well time will be saved.

2. Development of new-energy cars Thanks to the country's favorable policies and promising market prospects, China's production and sale of new-energy cars both increased more than 300 percent to reach 78,000 and 74,000 in 2014, according to statistics from CAAM report released in January 2015.

Environmental standards and policies will continue to be strengthened as China faces challenges in environment protection and energy saving. With these in sight, China has great potential to become global leader of new-energy cars market.

"The new policy package was on the cars, which would support the growth of new energy automobiles." said Zeng Xiao'an, director of Economic Construction Department, Ministry of Finance.

3. Market with huge potential in the third and forth-tier cities In recent years, China's auto market growth has shifted from the central cities to the third and forth-tier cities, a very important factor to affect the makers' business strategy.

In future, some 68 percent of the total buyers are expected to emerge from the third and forth tier cities, and first-time buyers will take 56 percent of the rate, predicted by Nielsen Report September 2014.

Keeping in mind a clear vision on the market potentials and trends, automakers are not to miss the chance in 2015, rather will naturally adjust their strategy to gain more profit.

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