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2015 China Auto Marketing and Communication Review

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Since 2002, China has been the fastest growing automotive industry in the world. Numerous international
carmakers collaborate with Chinese counterparts to participate in the atrocious race on performances and
technologies, hoping to secure a larger share in this lucrative market. Facing the growing governmental
restrictions and the shrinking market demand, it is time for carmakers to enter the pit for strategic
adjustments and to get ready for the next race to begin.
As a leading global automotive marketing agency, Havas Worldwide has assisted
many international and Chinese carmakers to grow steadily and rapidly in China. In this report, we have
forecasted the 2015 trend in Chinese automotive industry based on our professional insights from market
and communication in 2014. As the first agency to devise trend forecasts exclusively for the automotive
industry, we wish to assist carmakers to get ready and win the next race.

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2015 China Auto Marketing and Communication Review

  1. 1. China Auto Marketing and Communication Report 2015年中国汽车市场营销和传播趋势报告
  2. 2. Pit Stop for a New Race Since 2002, China has been the fastest growing automotive industry in the world. Numerous international carmakers collaborate with Chinese counterparts to participate in the atrocious race on performances and technologies, hoping to secure a larger share in this lucrative market. Facing the growing governmental restrictions and the shrinking market demand, it is time for carmakers to enter the pit for strategic adjustments and to get ready for the next race to begin. As a leading global automotive marketing agency, Havas Worldwide (灵智精实整合营销传播) has assisted many international and Chinese carmakers to grow steadily and rapidly in China. In this report, we have forecasted the 2015 trend in Chinese automotive industry based on our professional insights from market and communication in 2014. As the first agency to devise trend forecasts exclusively for the automotive industry, we wish to assist carmakers to get ready and win the next race.
  3. 3. Market
  4. 4. 2014 Market Performance
  5. 5. 1151.2 280.8 130 1208.8 381.9 184.2 Y2014 Y2013 Rocky RoadAhead, Market GrowthSlowingDown The world’s largest automotive market, China, is finally cooling off after years of high speed growth. Growth in new car sales has slowed significantly with sales grew 13.4% of 2014, down from 20.7% growth in the year earlier, according to China Association of Automobile Manufacturers (CAAM). Source from China Passenger Car Association (CPCA) The sedan segment has taken up an impressive market share of 66.7% in 2014, achieving a sales of 12.09 million units. The growth rate, however, is not as promising. Sales has only grew by 5% in comparison with 2013, making the segment brutally competitive. Despite the growing feebleness of the segment, it is still where manufacturers make the most profits from. MPV and SUV, on the other hand, have proved strong growth potential with outstanding growth rates of 41.7% and 36% respectively. 1293 1561 1771 Y2012 Y2013 Y2014 20.7% 13.4% 36% 41.7% 5.0% MPV SUV Sedan 2012-2014 Chinese Passenger Vehicles Market Growth Rate 2013-2014 Chinese Passenger Vehicles Market Growth Rate (By Segment) unit(10,000)
  6. 6. Another Bitter Winter For Japan Carmakers InChina Facing the political tension between Beijing and Tokyo, Japanese carmakers have resorted to a rather conservative approach on market expansions and model launches in China. Thanks to many years of high product awareness, the 2013 sales was still remarkable. However, under the twin challenges of rising political tension and slowing Chinese economy, major carmakers downward adjusted yearly sales target in 2014 Q3. Yet, with best-selling products losing the halo to make basic sales contribution, none of the Japanese manufacturers succeeded to meet the target. The market growth rate in 2014 is far from satisfying. 2014 is a product launching year for the Japanese brands, a fruitful of popular models such as X- TRAIL, Corolla, Levin and XR-V were launched in China. New products, however, made little stimulations to the general sales. The gains could hardly fill the gaps from the severe drops of the older products, not to mention boosting the growth rate further up. 凯美瑞_Camry 汉兰达_Highlander 逍客_Qashqai 天籁_Teana CR-V_CR-V 雅阁_Accord 马自达6_Mazda 6 Y2013 177649 95216 124589 106220 189972 118920 93374 Y2014 150311 84490 87448 109290 168184 108487 61636 -15.39% -11.26% -29.81% -11.47% -8.77% -33.99% +2.89% 5.67% 5.67% 5.57% 5.18% 4.81% 4.58% 1.22% 1.05% Y2013 Market Share Y2014 Market Share 2013-2014 Sales of Major Japanese Products 2013-2014 Market Shares Of Major Japanese Brands Source from China Passenger Car Association (CPCA)
  7. 7. -0.04% -0.32% 0.02% -4.21% -3.91% -3.35% -3.42% -4.24% -3.04% -2.00% -1.28% 0.00% -0.15% 0.29% 0.10% 2.61% 3.83% 4.16% Chinese Carmakers Feel The Pinch Chinese carmakers suffered heavy losses in market share due to their poor performances in the compact car segment. Consecutive declines can be observed in the first half of 2014, yet the rebound in July is proven to be a sign of market recovery. Domestic carmakers wrapped up with a total sales of 7.57 million units in 2014, making a growth of 4.1%. The market share of 38.4%, however, is not as pleasing as it is a 2.1% drop from 2013. Chinese carmakers are doing well in the SUV segment. With its more affordable price and seemingly larger size, consumers who do not value brands and are tight on budget tend to perceive them as a more cost-effective option. Chinese SUVs have achieved an impressive sales of 1.89 million units in 2014, a 50.9% jump from 2013, much higher than the 37.1% growth of the overall SUV segment. Interesting enough, many top selling SUVs are the only major source of sales for their brands. 28.6% CS35+CS75 49.5% TIGGO 3+ TIGGO 5 15.3% GX7 25.0% S6+S7 65.2% GS5 100% Sales in SUV vs. Overall Sales Of Selected Chinese Brands Source from China Passenger Car Association (CPCA) 2013-2014 Market Share YOY Growth Rate of all Chinese Brands 2013年7月 2014年2月 2014年8月 2014年12月
  8. 8. The Staggering Premium Market InChina More-affordable premium brands such as Audi, BMW and Mercedes cater to the growing middle class by introducing more competitively priced models. A3 by Audi, 316Li by BMW, C180 by Mercedes. These more economical models expand potential customer pool further by attracting the more price sensitive individuals, making luxury affordable. As target consumers are getting younger, second- tier premium brands such as Jaguar, Infiniti and Lincoln are gaining importance in China. Younger consumers no longer look for cars that merely prove their social status. They are looking for models that truly reflect their unique tastes and personalities. These “newer” brands took the opportunity to offer models that differentiate the owners from the crowd. Audi 575.1 K BMW MB Jaguar LandRover Volvo Lexus Cadillac Porsche Infiniti DS 456 K 282 K 122 K 81.2 K 76 K 73.5 K 46.9 K 30 K 26.7 K Audi A3 MB C-Class Porsche Macan Infiniti Q50L Cadillac ATS Lexus NX DS 6WR Source from China Passenger Car Association (CPCA) 2014 Sales Ranking For Premium Brands / Illustrations Of Selected Newly Launched Models
  9. 9. Automakers Shove Cars DownChinese Dealer Throats Source from National Information Center Proactive Approach: Audi subsidized its dealers 2.05 billion yuan, facilitated a new business policy and lowered the sales target for 2015 Passive Approach: In response to dealers' petition, BMW announced to provide 5.1 billion yuan subsidies to the dealers Deadlock: Porsche continued to ignore its upset dealers who were threatening to stop stocking. Renault agreed to cancel inventory volume assessment, but still did not mention anything about subsidies. In 2014, the operating pressure for passenger-car dealers surged, 55% of dealers could not profit from selling new cars. Merely 17% of dealers could make profit in their very first year of operation. The profitability of luxury-car dealers is even worth concerning. Hardly any, in fact, 100% of luxury-car dealers bear losses in the first year of operation. Moreover, less than 10% of dealers achieve return on investment within five years. 1.Hidden Danger 2.Break Out 3.Rescue Plan In 2014, over 70% of dealers accused carmakers for forcing inventories on them in order to pad the number for the sales target. The action made 47% of dealers to bear a stock-sales ratio of 2 , a number much higher than the usual 1.5 alert level. In August, 13 Honda dealers announced to protest by not stocking from the manufacturers . In November, FAW Toyota dealers intended to quit the dealer network as inventory level exceeded the limit by 10 times. In December, Beijing Hyundai dealers in Shanghai collectively quitted the network. Last but not least, BMW dealers requested a subsidy of 6 billion yuan to levitate the overstocking issue. 1.10 2.01 1.63 1.68 1.58 1.53 1.46 1.35 1.19 1.29 1.38 1.000.97 2.33 1.38 1.52 1.51 1.69 1.62 1.56 1.42 1.48 1.83 1.53 jan Feb mar apr may jun jul aug sep oct nov dec 2013 2014 2013-2014 Inventory Alert Level Trend For Chinese Auto Dealers
  10. 10. The More Segmented Market Segments The growing popularity of SUVs and the rising consumption share of the young generation have shed the spotlight on the subcompact SUVs. Its compatible price, fuel efficiency and trendy design guaranteed the segment a promising high- speed development. Even in this new subcompact SUV segment, joint venture brands alone are further "divided" to attract consumers of different needs. Peugeot 2008 and Buick Encore, for instance, are more attracted to consumers who value brands, designs and perceived qualities. For those who are sensitive to price, space and configurations, they are prone to choose products such as Hyundai ix25 and Citroen C3-XR. Joint venture manufacturers have found just another new market opportunity located in the gap between the traditional A+ and B0 segments. These new products are direct threats to the A+ sedans and also confronting the shares of entry level B0 models such as Chevrolet Malibu. Kia K4 and Hyundai Mistra with larger space, Volkswagen Lamando with more power and better configurations, Peugeot 408 with upgrades on everything you could think of. Manufacturers are striving to fulfill consumer needs for practicality, quality and innovation by launching the aforementioned products. Design and Quality 2008+ Encore Space and Practicality ix25+C3-XR Supreme A+ Models 408+ Lamando Refined B- Models Mistra +K4
  11. 11. New Models with STT in 2014 New Techs Onboard Major manufacturers are investing more on research and development of the Stop-Start Technology (STT) as government regulations on fuel economy grow more stringent. The gas-saving hybrid technology turns off engine when the car is not in motion and restart once the brake pedal is released, improving fuel efficiency by an average of 3.5%. Acceptance and purchase intention, however, remain low as the technology is still immature. In-car telematics is the blending of wireless telecommunications technologies and infotainment systems, ostensibly with the goal to provide drivers an intelligent and assuring driving environments. Automakers are eager to launch subsidiary brands for telematics partly to keep up with the pace of market development, and partly hoping to be differentiated in this homogeneous market by offering richer value-added services. In respond to consumers' growing interests on intelligence and safety, brands are introducing more safety focus technologies to the Chinese market. For instance, adaptive cruise control , night vision and auto-braking are introduced to enhance competitive advantages. Volvo has a vision that by 2020 nobody will be seriously injured or killed in its new cars. Volvo’s City Safety features pedestrian and cyclist detection with full auto brake, day and night.  Peugeot 408  Mazda Axela  Emgrand EC7  Chevrolet Sail 3  Volkswagen Golf 7
  12. 12. Trends in Chinese Auto Market
  13. 13. Cars Restriction Sparks Panic, Demand Boost In an attempt to control smog and traffic, Shenzhen abruptly placed a cap on car purchases on December 29th 2014, putting citizens off guard. Residents flooded the Traffic Management Department to obtain certificates proving they have bought their cars before 18:00. Customers who purchase cars after this time would have to get their new car plates by lottery or auction. The sudden policy has aroused public complaints and disappointments. In fact, ever since Beijing and Shanghai started the license plate rationing, citizens of other major cities started to wonder when and where would be the next one. The growing pessimism among the publics has spurred negative emotion and sparked panic buying behaviors. Not only does rationing accelerate the market growth rate, it is also murdering the health of the automotive industry. Beijing capped the number of license plates in 2011 when car ownership hit a new high of 4.8 million that year. However, started with Guangzhou, the standard for the policy has lowered by half. Any city with car ownerships of more than 2 million are likely to face license plates rationing. Chengdu and Chongqing have over 3 million cars on the street, Qingdao and Nanjing also have 2 million cars running around, these cities are very likely to be the next to join the eco-squad. Some small cities that are not on the list may even volunteer to impose license plate restriction to shove smog out the town. Under the policy, consumers are prone to purchase cars with higher quality and perceived value. They are more fond of premium brands and SUVs, hence a good opportunity for the German brands. License plate restrictions may stimulate the growth of vehicle replacement substantially, but new purchases may be significantly decreased. As the perceived value is much lower, Chinese brands may retreat from the frontline to market in Tier 3 and Tier 4 cities.
  14. 14. 1.7% 4.9% 20.0% 11.2% 40.3% 9.3% 1.6% 4.7% 6.3% 1年 2年 3年 4年 5年 6年 7年 8年 8年以上1 yr 2 yr 3 yr 4 yr 5 yr 6 yr 7 yr 8 yr > 8 yr Trade InWave InMajor Cities Source from: (1) Sinotrust report; (2/3) 2014 Autohome trade-in leads report The Number Of Years Consumers Hold To Trade-In For New Cars (1) 71.5% of consumers trade-in 3 to 5 years 41% 21% 14% 7% 17% 22% 5% 21% 39% 13% A0级车 A级车 B级车 SUV 其他 现有级别 意向置换 38% 17% 15% 14% 16% 22% 19% 31% 13% 15% 自主品牌 日系 德系 美系 其他 现有级别 意向置换 Trade-In Preferences By Segments (2) Trade-In Preferences By Brand Nationality (3) Chinese automotive sales volume has been steadily increasing since 2008. By assuming consumers replace their cars in an average of 3 to 5 years, China has entered the peek of vehicle replacement in 2012. With more Tier 1 cities imposing restrictions on license plates, fewer plates are available, hence the market focus has shifted to vehicle replacement. In 2012, 580K units of new cars were sold in Beijing, while another 700K units were trade in the secondhand car market. New car sales has benefited from the prosperous secondhand market, over 60% of new car sales came from vehicle replacement. Dealers’ replacement service has also increased significantly from 10% to 50%. Attracted by its practicality, convenience and sport potential, 39% of consumers would like to consider SUV for their next car. Consumers tend to look for an “upgrade” when considering for trade-ins. German brands are, hence, more preferable with their higher perceived quality, better brand reputations and stronger luxurious touch. A0 A B SUV Others Currently Owned Car Preference For Next Car Currently Owned Car Preference For Next Car Chinese Japanese German American Others
  15. 15. RisingAwareness OnFuel Consumption Brand Swept Volume Maximum Power and Torque Models Equipped General Motors 1.4T 110kw/235Nm Encore、New Cruze PSA 1.2T 100kw/230Nm Peugeot 408, 308S Volkswagen 1.2T 81kw/175Nm Golf 7 BMW 1.5T 100kw/220Nm Series 2、Mini Ford 1.0T 92kw/170Nm Ecosport、Fiesta GM Dynamic Skip Fire Volkswagen BlueMotion Volvo KERS In late 2014, China announced to punish carmakers by restricting their production and publicly naming them if they fail to meet fuel consumption requirements on passenger vehicles set for 2015. Earlier last year, China requested automakers to lower the average fuel consumption of passenger vehicle to 6.9L/100km by 2015 and 5L/100km by 2020. Major automakers eagerly introduced low-emission technologies such as Stop-Start system (STT) and low-emission turbocharged engines (ex. 1.2L Turbocharged Engine). Hoping to meet government criteria and to educate the first pool of eco-friendly Chinese consumers, adjustments were also made to increase the production proportion of smaller compact models. Fuel saving technology is immature in general. Yet, with restless efforts in research and development, carmakers successfully introduced fuel conserving technologies such as Dynamic Skip Fire with cylinder deactivation and KERS with energy storing flywheel. Advanced transmission technology and hydromechanics chassis design are also introduced to enhance fuel economy.
  16. 16. Premium Brands vs. Made InChina New Locally Produced Models in 2015 Luxury-car manufacturers enjoy lower operation cost by producing locally in China. Brands can avoid paying import tariffs, source parts more cheaply and efficiently, and benefits from lower labor and shipping costs. Reducing import volume would brings cost advantage and allows brands to boost sales by offering more competitive prices. “Made in China” allows brands to be more responsive to market change. Environmental factors such as exchange rate fluctuation and policy changes would make little impacts on brands that produce locally. Local production not only gives both dealers and consumers greater confidence, it also allows carmakers higher marketing budgets for brand building. Infiniti, for instance, earned high brand awareness and fondness in return of its heavy investment in building brand image. Despite the slowing growth of Chinese automotive market, demand for luxury cars is still rocket high. To meet the strong demand, premium brands all pick up the pace and get ready to produce domestically in China. However, in this growing competitive market, is localization really the magic for a long term bloom? Infiniti QX50 Chery Jaguar Land Rover Aurora Volvo XC60 Jaguar XE Opportunities For Second Tier Luxury-Car Brands Challenges of “Made In China” Given consumers’ lack of confidence in the words “Made in China” and the production capacity of joint venture partners, the quality of locally produced premium-cars is at doubt. Furthermore, it is difficult to grasp the degree for price reduction. Consumers could hardly feel the increase in cost effectiveness with little changes in price. Yet, heavy reduction could lead to diminishing premium brand image. It is of great importance to find the balance among sales target, network expansion and brand image. In order combat the heavy sales pressure, manufacturers need to learn to work on a common ground and also cooperatively with their dealers.
  17. 17. Sales Promotion, The New Marketing Normality A trend of continuously price cuts could be observed in the overall automotive market in 2014. In order to meet sales targets, carmakers had increased the strength of sales promotion gradually over the 12- months span, striking a record even higher than the year of 2013. With the market cooling down, it is becoming harder for new products to hold their price tags firm. Product cycle has significantly shortened as consumers are growing less attentive and interested to new product launchings. To sustain market shares, many carmakers resort to price cuts as soon as three months after product launch. Facing direct competition from its twins brother Toyota Levin, the 11th Generation Corolla facilitated promotion policy “Five Degrees of Gratitude” in pre- sales period. Corolla introduced more promotion packages such as the “Six Degrees of Offering” after product launch to attract eyeballs and to maintain price competitiveness. Source from Wilson Price Tracking Report 201412 9.5% 8.6% 8.8% 9.0% 9.2% 9.6% 9.9% 10.1% 10.4% 9.7% 9.6% 9.6% 9.7% 9.5% 9.3% 9.6% 9.7% 10.1% 10.5% 10.7% 11.0% 11.1% 11.7% 11.9% jan Feb mar apr may jun jul aug sep oct nov dec 2013 2014 2013-2014 Strength of Sales Promotion In The Overall Market K4 1.8L AT GLS Trax 1.4T AT DeluxeLevin 1.6L CVT G Elite Octavia 1.6L AT Elite Yearend Cash Discounts For Selected Newly Launched Models(December 2014)
  18. 18. 7-Seaters SUVs OnTheir Way ToReplace MPVs With the introduction of second-child policy and the growing demands for vehicle replacement and second time purchase, 7-seater SUVs are becoming more and more popular these days. Reasonably priced, larger room, higher capacity, multi- purpose and flexible space arrangement, these characteristics have all made 7-seater SUV a great bargain for the consumers. 7-seats SUVs are widely covered by mainstream carmakers in the market, ranging from 150K yuan Chinese SUVs to joint venture SUVs of more than 300K yuan. Panaroma sunroofs, leather seats, LED headlights and other innovated configurations, 7-seater SUVs’ selling points are changing. As consumers value more on space and comfort, communications are now focusing more on the practicality of SUVs rather than the usual off-road capabilities . With 7-seater SUVs joining to market luxurious touch and premium quality, the boundary against MPVs is growing blur. However, the future of this market segment is not as promising. Some so-called 7-seater SUVs are really just “fake” ones as their third rows are far from spacious. Hence, consumers would be extra rational in weighing the practicality and necessity of owning a 7-seater SUV. <10% Sales Share of Highlander 4WD in 2014 >40% Sales Share of Charger 7-Seater 2WD in 2014 Core Selling Points For 7-Seater SUVs 3 Rows 7 Seats Higher Capacity Panaroma Sunroof Wider View Comfortable and Spacious Room Premium quality
  19. 19. It’sHard ToMakeALiving, Dealers Set Eyes OnPost-Sales Market In recent years, dealers could hardly profit from selling new cars, so they turned their attentions to the post-sales market. The profitability in post-sales market relies heavily on trusting customers and on dealers’ cost advantages on branded accessories. Yet, the rising of Internet sector is rapidly eroding the profit away. With information readily available on the Internet, consumers are becoming more sophisticated and experienced when making purchase decision. The rampant of ecommerce sites such as Taobao and JD has aroused public interests in DIY activities, hence deceasing the demand for dealer visits. Furthermore, with the support of operating capitals, major Internet companies eagerly integrated offline resources to offer a more affordable and convenient door-to-door car maintenance service. Hoping to establish long term after-market relationships, many dealers packed post-sales service into sales packages to recruit customers as early as possible. Many luxury-car dealers defend competitions from the Internet by providing more diversified services to customers. For instance, some dealers provide differentiated services such as golf training, coffee tasting and movie watching in luxurious cinema halls. These activities bring funs and a touch of lifestyle to the traditionally tedious post-sales service. 2014 Venture Projects in Car Maintenance Industry Date Company Round Amount 2014.11 BoPai /EasyCar Series A Over 10 Million Yuan 2014.10 Cheyian Series A 25.93 Million Yuan 2014.09 EasyCar Series A Over 10 Million Yuan 2014.08 Motor Geek Angel Investor Several Million Yuan 2014.10 ebaoyang Series A USD 5 Million 2014.08 xiiche Angel Investor Several Million Yuan 2014.09 Yangchediandian Series A USD 4 Million 2013.10.22 Chemayi Series A USD 2 Million 2014.03 YouXiaMotors Angel Investor N/A 2014.01 Shunhonda Angel Investor N/A
  20. 20. Online Car Buying,AGrowingTrend InChina Source: 《2014 China netizens car-buying study》by iresearch and bitauto According to a recent survey by Nielsen, 92% of consumers would love to gather more information from the web prior to purchase. Chinese consumers are very open to online car market as 86% of the surveyed would consider buying cars online. A new mode of car buying is quickly shaping up in China. According to bitauto.com, 10.5% of its users placed orders online, while 70% of the 89.5% users who purchased at the dealers is frequent users of automotive vertical websites. Shopping for cars online is very tempting, not only does it save consumers lots of time, it also provides consumers higher discounts than the traditional dealers do. However, rather than building an integrated online transaction platform to meet the growing trend, the majority of carmakers still merely use ecommerce channels to advertise and to collect sales leads. Hence, there is currently no online platform existed to replace traditional dealerships. 42.20% 55.60% 68.90% 73.30% 形式新颖 奖品有吸引力 优惠力度大 操作方便/节省时间 10.5% Place orders online, collect cars at the dealerships. 89.5% Buy at the dealerships. Frequent users of automotive vertical websites 71.1% Easy to Use/ Time Saver More Discounts Attractive Gifts For Buying Innovative/ Interesting
  21. 21. Key Products Launched in 2014
  22. 22. Path-breakers WhoGrasped the Opportunity To MakeAChange Audi A3: First Made In China Premium Compact Car • A true masterpiece with breakthroughs in design, technology and safety. By deepening strategic cooperation with Volvo, Geely is on its way to become a leading Chinese automotive brand. • As an entry level premium compact car, A3 offers premium quality with a more competitive price. It is aiming at open-minded young consumers with high purchasing potential. Geely GC9: New Benchmark for Chinese Saloons SVW Lamando: A Coupe That Changed The Market • The Chinese compact-car market is family oriented. In order to offer young and sporty consumers a choice outside the box, SVW introduced Lamando, its sleek midsize coupe, to the segment.
  23. 23. Self-Strengtheners, The Never Resting Segment Leaders • Built with the newest MQB platform, Golf 7 is launched with its proud heritage and trustworthy brand reputation. Sales was doubled with the expansion in production capacity for Golf 7. SVW Golf 7: Best-Selling Chinese Made Hatchback Chevrolet Cruze: Take The Lead With Low Emission • Lower emission, higher standard. With the brand new powertrain, Cruze aims to wash off its fuel inefficient image and to maintain its leading position in the compact-car market. Honda Odyssey: MPV leader For Business & Family • With 7 seats layout, electric sliding door and larger room, Odyssey continues to be the leader in the MPV segment. In fact, even the best-selling business MPV Buick GL8 is feeling the pressure from its surging popularity.
  24. 24. The Daring New Comers ToThe Segment Benchmarks Buick Envision: The Tiguan Terminator • The “10% more” design philosophy equips Envision with larger space, powerful engine and more technologies. With its larger size and richer configurations, Tiguan’s leading position in the SUV market is severely threatened. Peugeot 408: New Era Pioneer Of Midsize Sedans • Built with the new EMP2 platform, Peugeot 408 comes with a wheelbase of 2730 mm, the widest in the segment. Aiming at the bestselling A segment model Sagitar, 408 is also equipped with the most advanced technologies in the segment. Infiniti Q50L: Challenger To the Premium-car Market • Q50L aims to attract attentions from "ABB" lovers with its sportier appearance, innovated steering technology, and most importantly, its longer wheelbase. Positioned as the most advanced luxury sport sedan, Q50L is ready to change the game.
  25. 25. Communication
  26. 26. Review of 2014
  27. 27. Pan-90s: The New Market Force The Rising Force in Chinese Automotive Market Pan-90s is the young generation who were born in between 1985 and 1997, a time of internet booming and rapid economic development. With their more global mindsets and comforts with consumerism, the Pan-90s have a stronger sense of self and also more unique aesthetics. As these individuals entering adulthoods, they are on their way to become the next big spender and market driver of the Chinese automotive market. Judge Me, Judge My Car First Growing up on the wheels, higher performance and safer safety could no longer excited the Pan-90s. Convinced by the saying “what kind of people drive what kind of cars”, Pan-90s crave for cars with novelty and personality, i.e. cars that differentiate them from the crowd. Front-view designs with imitation of human facial expression, for instance, are very popular with the young generation. Dynamic designs on bodylines, wheel hubs and taillights have gradually became the default criteria for purchase decision. Placing high importance on emotional satisfaction, Pan-90s yearn for comforting interior design and richer interactive experience with their cars. Open-minded but assertive, not only does this very trait of Pan-90s nourished the development of subcultural activities, it also shaped their preference for personal space and “loose circles”. They love to organize groups for their hobbies, but refused to be bounded by any single one. They are not fond of collectivism, but are not particularly into individualism either. Beside “vivid character”, there is hardly other terms to summarize such a diverse, open but self-contradicting group people. «Vivid Character »Is Their Only Commonality Brands, Are You Ready? The Pan-90s is a opportunity that no brand can forgo. Brands, however, are finding it difficult to connect with the nebulous new demographic. Aside from the usual recommendations like more tailored messages and greater social media presence, what else could brands do?
  28. 28. Entertainment Marketing,ANew “Must-Have” InCommunication Infiniti sales in China surged 76% in 2013 and the brand expects to maintain its growth momentum this year in the world’s largest auto market. The company launched a marketing campaign in 2013 to boost brand awareness, including sponsoring the popular reality-TV show (Dad, Where Are We Going) and “Dare to Love” brand campaign. Volkswagen debut its brand-new midsize coupe, the Lamando, in the 2014 Guangzhou Auto Show. To raise product awareness, the brand launched an intensive promotion campaign prior to the official launch of Lamando. By sponsoring the reality show Running Man (China), Volkswagen aroused market interests by teasing the car in the show. The show was on air in mid-October and is now a buzz in the country. Ford has became the exclusive title sponsor for Chinese Idol, the largest and most watched reality TV show. Ford Kuga featured heavily in the nationwide initial auditions and the three-month competition that began airing live on TV every weekend. The sponsorship has gained Ford and the new Kuga unprecedented exposure among Chinese consumers, especially the younger generation of car owners who appreciate the practicality and capability of a SUV. The collaboration of variety shows with automobile marketing is not new. In recent years, a growing preference on shows that are both fun and interactive could be easily observed. Several carmakers are currently eagerly drafting entertainment sponsorships into their annual market plans. Entertainment marketing is becoming a new “must-have” in boosting brand awareness and launching new products.
  29. 29. Technology IsNow The Eye Candy ToHook Consumers Volvo introduced another high performance Drive E engine in late 2014, featuring not one, not two, but three turbos to provide fuel-efficient horsepower. The company’s newfound devotion to the four-cylinder engine is set to permeate its complete lineup of cars. In fact, Volvo has been stressing on its Drive E Powertrain Concept in its communication for quite a long time, hoping to attract more of eco-friendly consumers who value performance. Dongfeng Peugeot initiated three approaches- Technologies, Products and Customer experiences, in hopes of entering into the market in a way that is the most relevant to customers’ interests and integrating the “E Power Strategy to improve its all-dimensional support and hone a more competitive brand edge Honda is expanding application of the Earth Dreams Technology, a series of new- generation powertrain technologies that realizes both driving performance and fuel economy, to most models sequentially. Honda also noted that it is preparing for local development, production and parts sourcing of hybrid models in China, which will result in more affordable prices.
  30. 30. Regional Marketing = The New Core Strategy China is often viewed as a land of limitless opportunities. Decades of economic growth and rising incomes, the ubiquity of digital technology, and the transformation of the hearts and minds of Chinese consumers all make China a market too attractive to ignore. However, careless misconception of China as a homogeneous market often leads to difficulties in assessing market demand and enacting effective strategies. Consumers from various regions are significantly different from one another in terms of purchasing power, attitudes, lifestyles, media use, and consumption patterns. Manufacturers set up a variation of regional headquarters to further adapt to local market conditions and to better devise sustainable strategies. Establish four independent regional marketing departments to facilitate local marketing activities, with budget more than 1billion yuan. Established a national headquarter to device general marketing directions for the ten regional sales with more than 1.5 billion yuan budget.
  31. 31. Trends in Communication
  32. 32. Fading Halo Of The Traditional Purchasing Funnel The rapid development of the Internet and the proliferation of digital media have reduced the usage of traditional purchasing funnel metaphor in many industries. Automotive industry, however, is still widely adopting the traditional funnel as car-buying behavior remains fairly routine and unique. With information asymmetry and environmental factors such as license plate rationing, car-buying process tends to have a relatively longer consideration period as consumers are more easily affected. As the majority of consumers make purchases in the dealers, carmakers are still using the traditional funnel to locate market opportunities and resolve sales barriers. Nevertheless, the traditional approach could no longer apply to the rising new market force –the 80s/90s. These young consumers value word of mouth very highly, they prefer to learn the products via people and sources they trust, rather than from the brands themselves. Hence, these consumers are often deem as fickle and random, cutting through consumer decision journey anytime anywhere. As a result, a brand-oriented purchasing funnel is developed to boost sales conversion rate. The new model is consumer-oriented and aims to enhance consumer experience through studying individual purchasing behaviors 认知 Awareness 熟悉 Familiarity 深入考虑 Consideration 到店洽谈 Onsite Visit 购买 Purchase
  33. 33. New Consumer Journey Metaphor For Car Buying Young consumers only take in messages from brands they find interesting. Brands need to provoke curiosity among the young consumers in order to build relationship with them. Young people value the comments from those they recognize and trusted than from the product reviews on vertical websites. They are constantly seeking for recognitions from others. Young consumers crave for products that are unique in a particular aspect. They are also looking for products that connect with them on an emotional level. Unique brand experiences are of great importance to the young generation. These consumers are looking for beyond-expectation experiences with both the surrounding services and the product itself. Consumer Insight Build relationship through establishing “cool”, “trendy” and “fashionable” brand images with multichannel communications. Release complete product information, unveil unique selling points to differentiate from the competitors. Become close friends with the consumers, amplify emotional product benefits with a witty and humorous manner. Offer unique brand experience through collaborating digital technology, test drives and 4S stores. Marketing Action Hey, it’s coming… People say it’s awesome, It’s really unique. Yep, it’s mine! Relationship WOM Appeal Experience
  34. 34. Recruiting TheYoung Consumers Bombarded by the proliferation of media and products, only messages coated with “differences” can catch the attentions of the information-fatigued young consumers. This young population is not interested in exceptions. In fact, they are simply craving for products that bring them out of the crowd, products that show the hidden rebel buried deep down their hearts. Talk sensitively to the young consumers, they are more than willing to turn themselves in as long as they resonate with the core spirits of the brands. Young consumers do not like being lectured, they loathe any communication that is overly obvious and forcing. Product placement and content marketing, for instance, are among the marketing tools that they find contemptuous. Young consumers are like cats –they are only interested in things that are authentic enough, fun enough, and most importantly, with attitude. The 15 months project recruited young consumers by employing emotional appeals. Both the prints and the copies elaborated on the sense of self and the pursuit for freedom, reaching resonances with the young and adventurous target audience. Jeep Patriot #Gap Year Project# This attitude of strong sense of self permeate the brand campaign. Featuring young mavericks with their true selves, the campaign aims to encourage Chinese young consumers to truly express who they are and to embrace what makes them unique, no matter what others may say. Buick Encore #Young,ThenSUV# Adidas #This Is Me# Targeting the Post-80s, Buick deliberately made the launching ceremony short and to the point, introducing the “SUV for young people”. Calling for resonances from the young consumers, instead of employing celebrity endorsement, Encore featured videos with 6 Post-80s standing out for their value, uniqueness and attitudes which echoes Post-80s.
  35. 35. Brand Building, Goes Emotional With its renown off-road performance, Jeep has always been proud of producing the “real SUV”. Jeep used to market extensively on the wild side of the brand by emphasizing its expertise in off-road performances. A hardcore image of the brand was accidentally shaped, hence paving its way to the niche market. Jeep defined SUVs as “a different way of life” and regards itself as the best representative of this freedom-loving ultimate lifestyle. In 2012, Jeep took the chance of it 70th anniversary to reinitiate brand building. The brand campaign sticks to storytelling by taking the road less traveled again. The company crafted an emotional, oblique approach that barely shows any Jeep models at all. Cars are no longer the focus, people are. Through formularizing communications, the brand successfully curated loyal followers by generating brand buzzes. Jeep elaborates on brand attitude through storytelling via micro films. SUV performances, on the other hand, are demonstrated through holding national test drives and brand events regularly. Jeep successfully delivered brand positioning and attitude through telling stories that echo with their target audiences. Using an emotional approach, the relationship with potential consumers is further strengthened.
  36. 36. Got Money? Start Planning For Entertainment Marketing Entertainment marketing is now the new favorites in automobile communication. Lamando with “Running Man“, Kuga with “Voice of China“ and JX35 with "Dad, Where Are We Going" are some big players in entertainment marketing. These brands did not succeed out of sheer luck – without comprehensive marketing plans, nothing would be achieved. With one in three Chinese reportedly watching the first season of “Dad, Where Are We Going” and over 2.1 billion people searching the show online, Infiniti has undoubtedly increases its brand awareness in China. QX60, the model featured in the show, has achieved a significant increase in sales in 2013.The collaboration has proven fruitful, Infiniti launched new campaigns in the following year to further emphasize on its emotional appeals to consumers in China. Infiniti’s entertainment marketing strategy is more than just a TV show sponsorship. A star- studded brand event was hosted, featuring the China debut of Katy Perry and performances of popular Jimmy Lin and Harlem Yu. Sponsorships for popular program “Xiaoshuo” and “A Bite Of China” were implemented. Microfilms were also produced to further advocate Infiniti’s core brand value of “performance, passion, precision and provocation. If poorly planned, entertainment marketing could easily dissolve into single events. Without buzzes, it would be difficult to resonate with consumers and to enhance brand influences. Communicate via myriad channels could enhance consumer engagement, but it is of great importance to provide consistent information across the channels. Entertainment marketing is most effective with integrated media and channels, brand spirits and product benefits could then be planted into the sub-consciousness of the crowd.
  37. 37. More Campaigns OnTechnologies,For Fun Press “R” for the other side of story, switch between storylines at any point of the video. Honda came up with an interactive dual-story video for the Civic and its sportier version, the Civic Type R. Titled “The Other Side”, viewers could switch in between the cozy family love story with ECON button and the intense and sporty story with the R button. Audi demonstrates A4’s legendary road hugging capabilities through “Quattro® Experience” installation. The installation features handcrafted mini raceways and three Audi A4 slot cars. The slot cars are equipped with in-car cameras, which allow racers a first person as they zip around the track via iPad –enabled controllers. Volkswagen’s Chrome extension stop YouTube videos when you turn away. To illustrate its stop-start technology, which turns the car off when stopped, Volkswagen launched a Chrome plugin that pauses a video when the viewer look away from the screen. The extensions utilizes computer’s camera to achieve the feat. Mercedes-Benz uses chicken to show off its new feature –“Magic Body Control. The new feature analyze the road via a windshield-mounted camera and adjusts the suspension accordingly. Mercedes compares a chicken’s ability to keep its head perfectly positioned while moving its body to illustrate the smoother and more stable ride the feature offers. http://v.youku.com/v_show/id _XODE3NjAxNDI0.html http://v.youku.com/v_show/id _XNTMxMjk4MjY4.html http://v.youku.com/v_show/id _XNTY1NTYwMzM2.html http://www.letv.com/ptv/vpla y/21230892.html
  38. 38. Controls Tighten Up OnRegional Content Publishing Regionalization allows marketing to be more flexible and targeted. With the help from new media, brands could communicate with its core target audience via multiple channels faster and more cost –effectively. In addition to the communication from regional headquarters, carmakers also financially support its dealers for independent marketing behaviors. Dialects and local social events are largely adopted to generate buzzes and to boost brand preferences. Understanding what the locals like and what they talk about is essential to facilitate effective regional marketing strategy. Down-to-earth contents could often make consumers laugh and could positively increase brand awareness. However, be aware of the bottom lines, inappropriate use of language and event marketing may result in negative brand perception and biased brand image. In this increasingly connected world, missteps and misinformation spread faster than ever. Brands could suffer tremendous pressure from public opinions with even the slightest bit of improper communication. Therefore, contents should be strictly reviewed before publishing by the regional headquarters and the dealers. Standard operation procedures for content publishing and crisis management mechanism should be developed to minimize any potential damages to the brands.
  39. 39. Highlight Cases in 2014
  40. 40. Promote Heritage With Xu Zheng CONTEXT Santana is one of the best-selling models of Shanghai Volkswagen in China. The model has been a huge hit for 30 years and has accumulated positive word of mouth over the years. In 2013, Volkswagen decided to strengthen its most functional entry level family car image by launching the All-New Volkswagen Santana. The brand wishes to attract more attention from the growing young population who has limited budget in China. CREATIVE IDEA Chinese renown actor Xu Zheng has long been famous for his diligence in improving acting and directing skills. Volkswagen invites Xu to be the product spokesperson and to promote the heritage of producing high quality Santana. EXECUTION & RESULT Xu took part and directed four TVCs specifically for Santana. Each TVC elaborates on different USPs of the car, namely “safety”, “efficiency”, “brand” and “craftsmanship”. All New Santana achieved a marvelous sales of 285,293 in 2014, a 60.7% increase from 2013. VIDEO LINK Safety:http://v.youku.com/v_show/id_XNjI0MjEwMzU2.html Brand:http://v.youku.com/v_show/id_XNjIzMDkwNTA4.html Economic:http://v.youku.com/v_show/id_XNjIzNTE0NjU2.html Craftmanship:http://v.youku.com/v_show/id_XNjMxOTg2OTg0.html
  41. 41. Beckham Launches New Jaguar CONTEXT China is becoming the British luxury and sports car brand’s most important and competitive market. David Beckham, arguably the most recognizable British star across the Asian continent, is chosen to be the Jaguar’s brand ambassador in China. Jaguar is investing heavily in brand ambassadors as it seeks to compete with Mercedes, BMW, Audi and Porsche. CREATIVE IDEA Beckham appears in a series of print and TV ads screened exclusively in China, starting with the campaign for launching Jaguar F-Type Coupe in the country. Beckham also appears in the brand TVC –“Never Stop Achieving”. EXECUTION The 2014 Jaguar Alive Brand Festival is Beckham’s first appearance as the brand ambassador in China. The event transported visitors through time to experience the past, present and future of the British brand’s legendary cars. The brand transformed the Beijing 751 D Park venue into iconic British landmark, the Royal Albert Hall, fully brought Jaguar’s British heritage to live. It was one of the hottest tickets among Beijing Auto Show’s pre-parties. VIDEO LINK http://www.iqiyi.com/w_19rsfh5l3p.html
  42. 42. Peugeot 2008 Plays Beyond 360° CONTEXT With only a few competitors, there is a large market space and market potential in the subcompact SUV segment. As first movers, Buick Encore and Ford EcoSport have built product awareness and status quite early in the segment. Dongfeng Peugeot 2008 should also take its first-mover advantage to build an unique product image that young consumers would resonate with. CREATIVE IDEA The 360 degree campaign of 2008 revolved around the communication concept “Play in Soul. In addition to traditional forms of communication, Peugeot’s global brand ambassador is appointed as the spoke person for 2008, a variety show is sponsored, mobile game marketing is executed to raise awareness and recognition of the newly launched product. EXECUTION 2008 achieved an outstanding sales of over 7000 units in its very first month. With the adoption of mass media, 2008 topped the Baidu Hot Search Chart for three months, an achievement that none of its competitors has made. 2008 has also sponsored a popular variety show named “Perhaps Love” on Hubei TV. The show is reportedly viewed by 300 million viewers online and contacted over 640 million people in total.
  43. 43. DS,Let Nymph Stay WithYou Forever? CONTEXT In 2013, Changan PSA appointed Sophie Marceau as the spokeswoman for DS 5 –the first domestically produced model in the DS line. The elegant French actress perfectly matches the brand’s spirit with both her attractive character and personal image. Her immense popularity helps boosting the awareness of the DS brand in China. CREATIVE IDEA China and France celebrates their 50th anniversary of diplomatic relation in 2014. To celebrate, Sophie Marceau was invited to perform “La Vie En Rose” on Chinese state broadcaster CCTV’s 2014 New Year gala. The show is hugely popular with more than 750 million viewers in China alone. As the actress got even more popular with the gala, DS appointed her to be the spokesperson for DS 6 to amplify the effect of celebrity endorsement to the fullest. EXECUTION As the spokesperson, Sophie Marceau is featured three videos –teasers, TVC at launch and blooper. Marceau starred as the heroine of the short movie “Ace Trilogy”, illustrated the perfect blend of French elegance with the wildness of an SUV, allowing the DS brand to stand firm among the second tier premium brands.
  44. 44. Geely Bright Prospect Coast Tour CONTEXT The struggles and survivals of small and micro businesses have received more and more attention. Geely GX7’s customers are mainly those emerging entrepreneurs who hold fast to dreams and struggle for them. CREATIVE IDEA Passing by 10 provinces and dozens of coastal cities, Geely seeks for local customs, maritime civilization and commercial culture; look for start-up small and micro businesses; listen to their growth story; and promote Chinese tradition and spirit in enterprising. EXECUTION The campaign “Geely GX7’s Coast Tour & Survey on the Survival and Development Condition of China’s Small and Micro Businesses started from Dongxing City of Guangxi Zhuang Autonomous Region, the southernmost point of China’s coastline, and go north in a relay. The coast tour provides opportunities for consumers to discuss the success and failure of their businesses with Geely and experience local commercial culture together.
  45. 45. Toyota Corolla Hotel CONTEXT Toyota launched two closely identical models, 11th Generation Corolla and Levin, in mid 2014. The 11th Generation Corolla by FAW Toyota is redesigned base on the European version of Corolla, while GAC Toyota's Levin is seemingly more sporty American Corolla. However, the two models are essentially the same, which poised difficulties for consumers to make decision. Clear positioning was urgently needed. CREATIVE IDEA Renovate hotel rooms with Corolla touch (modern, premium and comfort), to show Corolla’s capability to make drivers and passenger to feel just like home. EXECUTION FAW Toyota cobranded with Crown Plaza and Holiday Inn in 30 major cities, 2000 nights of stay is provided nationwide. Individuals who purchase Corolla by the end of August 2014 would be invited to participate a lucky draw for a stay in Corolla Hotel. Demands hit new high with a monthly sales of 29,000 units in December and an average monthly sales of over 20,000 units since September.
  46. 46. Critical Thinking 1. Subcompact SUVs in 2014, and now what? What segment will the blue ocean lie next? 2. With new technologies coming out, how to facilitate consumer education to encourage purchase? 3. How to sustain brand image when price cut (sales promotion) is becoming the new market normality? 4. When “Made In China”, how to guarantee product differentiation and sustain premium brand image? 5. How could dealers do to strengthen their relationships with consumers? 6. What is the future of online car buying? What could we do to really develop a brand new channel for car purchasing?
  47. 47. Havas Worldwide Formerly known as Euro RSCG Worldwide, Havas Worldwide is a leading integrated marketing communications agency. Operating in 316 offices located in 75 countries, we are the largest network by global accounts and also the first agency to be named Global Agency of the Year by Advertising Age. Founded in 1993, Havas Worldwide is one of the earliest advertising agencies to enter the Chinese market. Over the 22 years of operation, we have grown to be the most experienced integrated marketing agency in China. With innovated creative thinking and thorough understandings in the market, we strive to provide advertising, marketing, strategic, corporate communications, digital and social media solutions to our clients. As the first foreign capital advertising agency in China, Havas Worldwide has committed to serve clients with future-oriented integrated communications solutions since 2004. Over the past decade, we have proudly served key automotive clients including Dongfeng Peugeot, Dongfeng Citroen, Changan PSA, Beijing Auto, Jaguar and Volvo. Havas Worldwide have also worked with Air France, Dell, Pfizer, Master Kong, Yili and many other major market players over these years of operation in China.
  48. 48. Thanks

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