Date
11 December 2017
Car dealers in China have begun to partner with e-commerce firms to boost sales. Photo: Bloomberg
Car dealers in China have begun to partner with e-commerce firms to boost sales. Photo: Bloomberg

How internet is making life easier for car dealers and buyers

Internet shopping in China has been popular mostly for purchasing small-ticket items like clothes, digital products and home appliances. But now, some car dealers are trying to use the online channel to boost their business. China Yongda Automobiles Services (03669.HK) is one of them.

Wang Zhigao {王志高}, vice president of Yongda, told reporters last month that the group has noticed that the internet can play a major role in boosting car sales. Yongda has already tied up with several e-commerce platforms including Tmall.com, Autohome (ATHM.US), xcar.com and Bitauto.com.

For car buyers, purchasing a car online can actually be cheaper and save a lot of time compared with buying it in a dealer outlet.

This is how it works. First, potential buyers surf through the website and look for cars they like and check out the promotional offers.

Once a buyer has decided on the model, he or she can then make a down-payment, say 2,000 yuan (US$322), online to reserve a car and lock in the discount. Afterwards, the customer can head straight to the dealer’s outlet to test-drive and complete the transaction.

Some motorists have already praised the hybrid shopping mode as being efficient, saying it saves them the hassle of bargaining directly with salespersons in stores.

In some cases, dealers would deliver the car to the buyer’s doorstep even before the full payment is made. This was what Chevrolet dealers did when they promoted the Malibu model.

Wang explained that brick-and-mortar stores will serve as display and experience hubs, where buyers are welcome to test-drive the car models they are interested in. He believes the online channel will help stimulate transactions offline.

In its latest report, Morgan Stanley said it expects Yongda to achieve faster growth in both revenue and net profit this year. One of the reasons is that the company is adopting the e-commerce model in its full business line including new car sales, after-sales and used car sales.

Yongda’s revenue and earnings rose 20.2 percent and 28 respectively in 2013. About half of the dealer’s outlets are full-service 4S shops for luxury and ultra luxury brands, including BMW, Audi, Porsche, Jaguar, Land Rover, Bentley, Volvo, Cadillac and Infiniti.

After-sales is one of the recurring incomes for the car dealer; revenue from this segment was about 2.6 billion yuan last year, accounting for around 10 percent of Yongda’s total revenue.

For this important income stream, Yongda has also introduced an internet twist.

The company created its own automobile maintenance brand “Auto Repair” {車易修} in 2013, and then launched its first mobile application “Yongda Auto World” in November.

Consumers can conveniently locate a specific Yongda Auto outlet with the app, and arrive there with the help of the navigation function. Through the app, car sales information and after-sales promotion offers will also be announced immediately.

Bank of Communications estimates that Yongda will achieve 30 percent annual growth clip in the after-sales segment in the coming years.

More car dealers are likely to follow Yongda’s path, with research showing that Chinese consumers are becoming more open minded when it comes to buying cars online. More than 70 percent of 1,200 survey respondents said that they would like to buy cars online in the future, mainly because it is cheaper and more convenient, according to industry website Yangche51.com.

– Contact the writer at [email protected]

RC

EJ Insight writer

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