To summarize, China represents a significant proportion, up to 50%, of global sales for numerous Original Equipment Manufacturers (OEMs). However, the market is characterized by intense competition, and Chinese consumers are renowned for their proficiency in technology and their high expectations.

In light of these circumstances, OEMs are compelled to envision a revolutionary approach to the sales of automobiles. It is imperative for them to address the consumer demands for transparency, convenience, and a seamless purchasing experience.

To ensure continued success in the Chinese market, OEMs must take decisive actions that entail a paradigm shift in their operational strategies. By transitioning from a traditional wholesaler role to adopting a retailer mindset, industry leaders are embracing the necessary transformation to effectively cater to the evolving needs of Chinese consumers.

The Chinese automotive market has emerged as a crucial driver of OEMs' business operations for over a decade, and its significance is expected to further increase in the post-COVID era. However, given the intense competition, the strong influence of the state, and the rapidly evolving demands of customers, OEMs must acquire a comprehensive understanding of the key factors that enable them to thrive in this dynamic market.

This comprehensive study explores the strategic measures that OEMs and dealers must undertake to maintain their competitive edge. It combines a meticulous analysis of a survey conducted among 1,050 Chinese consumers and 250 Chinese car dealers with in-depth interviews featuring industry executives and thought leaders.

The study's findings reveal the following noteworthy insights:

• During Q2 of 2020, China accounted for approximately half of all cars sold globally.

• By 2025, an estimated 20% of all cars sold in China are projected to be New Energy Vehicles (NEVs).

• The Chinese automotive market witnesses the launch of two to three new vehicles on a daily basis.

These findings emphasize the dynamic nature of the Chinese automotive market and highlight the imperative for OEMs to proactively adapt their strategies to capitalize on emerging opportunities.

Chinese consumers are increasingly seeking a transformative approach to car purchases, prompting digital giants such as Baidu, Alibaba, and Tencent to establish themselves as primary sources for both new and used car transactions. These internet-based platforms thrived during the COVID-19 pandemic, benefiting from the restrictions on physical transactions. Recognizing this trend, Original Equipment Manufacturers (OEMs) are actively engaging with these platforms, with over 50 brands participating in Tmall's recent Double 11 shopping campaign. Notably, BMW has forged a substantial strategic partnership with Alibaba to expedite its digital transformation, while Tesla garnered substantial attention by attracting four million viewers through a live-streamed presentation by Chinese online celebrity Wei Ya.

China presents a unique market for OEMs to pilot and refine their future automotive sales strategies, but discerning customers are likely to require more sophisticated concepts beyond pure online sales. A staggering 71% of Chinese consumers initiate their automotive buying journey online, highlighting the significance of digital channels. However, 77% express a desire to physically experience the car before finalizing their purchase, underscoring the importance of offline touchpoints. Furthermore, two out of three consumers gather competing offers from dealers of the same brand to secure the best price. Notably, 81% of consumers prefer fixed and transparent prices, eliminating the need for negotiations.

These findings emphasize the need for OEMs to adopt comprehensive approaches that integrate online and offline channels to cater to the evolving preferences of Chinese consumers. Successful automotive sales strategies in China must strike a delicate balance between the convenience and efficiency of digital platforms while also providing opportunities for tactile interactions and transparent pricing, aligning with the demands of tech-savvy customers.

Chinese independent dealerships have long served as the foundation of the automotive retail industry, leveraging digital tools to enhance sales and marketing efforts. Recognizing the significance of digitalization, 56% of dealers prioritize investments in developing an online presence and embracing digitization within the next three to five years. However, dealers are now facing disruption from online platforms as they grapple with meeting the changing demands of consumers.

An overwhelming 81% of dealers acknowledge the need to adapt their business models to ensure future success. Traditional automotive sales pose challenges such as a lack of price transparency for customers and disjointed experiences between online and offline channels, requiring cumbersome workarounds. Interestingly, the fast-paced Chinese automotive market appears to have discovered a potential solution. Innovative startups like Aiways and NIO are effectively managing the online and offline sales journey, guaranteeing a seamless experience and competitive prices across channels and dealers.

This concept is gaining traction among Chinese dealers as well. Surprisingly, 63% of dealers do not consider fixed prices as an obstacle to selling cars, suggesting a willingness to explore alternative pricing models. Moreover, 83% of dealers anticipate positive outcomes from selling cars based on a fixed commission structure.

As the automotive landscape in China continues to evolve, dealers recognize the need to embrace change and seek innovative strategies. By streamlining the online and offline sales experience and exploring new pricing approaches, dealerships can better meet the dynamic expectations of Chinese consumers and ensure long-term success in this rapidly transforming market.

The COVID-19 pandemic has acted as a catalyst, propelling OEMs and their dealers to seek more efficient methods of selling cars in China. Our interviews with industry experts and investors revealed a unanimous recognition that the automotive sales model needs reinvention. To effectively capture the attention and loyalty of China's consumers, OEMs must take a bold step by placing the customer at the forefront.

Key Steps Towards Success:

• Embrace a retailer's mindset that prioritizes the customer experience.

• Conduct a comprehensive analysis of the organizational, technological, and financial feasibility of new sales strategies.

• Foster engagement with the dealer network to secure investor support and generate strong buy-in.

• Establish a dedicated project team to develop and guide the transformation roadmap.

This paradigm shift should yield benefits for both OEMs and dealers. By creating seamless online-offline customer journeys, facilitating touchless sales that have become the norm in the post-COVID era, and meeting customer demands for transparent, negotiation-free pricing, strategic and financial opportunities can be unlocked, enabling proactive positioning ahead of the innovation curve in China.

The time for action is now. The dynamic Chinese market demands swift and decisive measures to secure a competitive advantage.