Global Economics

China's New Car Lot is Online


China's hordes of first-time car buyers have quickly grasped the power of the Internet to help cut through marketing hype and identify the best models for their budgets and preferences. This is crucial in a nation where largely inexperienced consumers have been inundated with model offerings -- from subcompacts to sport utility vehicles to luxury sedans -- from foreign and domestic auto makers eager to prosper in the fastest-growing car market on earth.

With prices continuing to fall in recent years, Chinese families are going to extraordinary lengths to make sure they find quality vehicles for the lowest sticker price. "New car buyers in China are incredibly aggressive in adopting the Internet in helping them buy a car," says John Humphrey, senior vice-president for international operations at J.D. Power & Associates and managing director of the auto consultant's Asia Pacific China operations.

The number of Chinese consumers using the Web to research auto purchases has more than tripled to about 50% since 2002, according to J.D. Power. That tops Japan and is approaching the pace of the U.S.

111 MILLION USERS. When Ji Yingna decided to replace her midsize Buick Excelle, she immediately turned to sites such as sina.com and baidu.com that maintain deep model databases and powerful search functions. Instead of spending hours prowling around brick-and-mortar dealerships, she quickly zeroed in on the Volkswagen Jetta and the Honda City.

"I searched car models and then compared technical specifications, and decided these two were my targets," says Ji. Others visit auto club sites and car-related blogs to get intelligence on which makers are attentive or sloppy when it comes to service.

BIG SPENDING. Much like in the U.S., ad spending is migrating from print to the Web on the mainland, which is home to 111 million Internet users. That in turn has touched off an expansion of online auto sites that are investing heavily in car model databases. An especially popular one is the auto channel on sina.com, China's top Internet portal. It is pulling in about 20 million page views daily, mostly to its car database and search engine, where users can quickly assemble data on price, model, and features.

That level of participation has caught the attention of big foreign auto makers grappling with how to reach new buyers and establish their brand recognition in a big way. General Motors (GM), which last winter held an online contest to choose the name of a new Chevrolet compact, sees the Net as a powerful marketing tool in China and has shifted ad spending from print to online in recent years.

"We are spending as much on Internet advertising as any other brand probably has on the mainland," figures Chevy brand director Dale Sullivan. Wise move, given Chinese consumers' hunger for data on their dream cars.


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