China Auto Marketing and Communication Report

2015年中国汽车市场营销和传播趋势报告

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.

Market

2014 Market Performance

1151.2

280.8

130

1208.8

381.9

184.2 Y2014 Y2013

Rocky Road Ahead, Market Growth Slowing Down

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）

Another Bitter Winter For Japan Carmakers In China

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)

-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

The Staggering Premium Market In China

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

Automakers Shove Cars Down Chinese 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

1.00 0.97

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

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

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

Trends in Chinese Auto Market

Cars Restriction Sparks Panic, Demand Boost

In an attempt to control smog and traffic, Shenzhen abruptly placed a cap on car purchases on December 29 th

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.

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 In Wave In Major 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

Rising Awareness On Fuel 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.

Premium Brands vs. Made In China

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.

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 Deluxe Levin 1.6L CVT G Elite Octavia 1.6L AT Elite

Yearend Cash Discounts For Selected Newly Launched Models（December 2014）

7-Seaters SUVs On Their Way To Replace 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

It’s Hard To Make A Living, Dealers Set Eyes On Post-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

Online Car Buying, A Growing Trend In China

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

Key Products Launched in 2014

Path-breakers Who Grasped the Opportunity To Make A Change

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.

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.

The Daring New Comers To The 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.

Communication

Review of 2014

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?

Entertainment Marketing, A New “Must-Have” In Communication

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.

Technology Is Now The Eye Candy To Hook 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.

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.

Trends in Communication

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

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

Recruiting The Young 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.

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.

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.

More Campaigns On Technologies，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/vplay/21230892.html

Controls Tighten Up On Regional 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.

Highlight Cases in 2014

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

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

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.

DS，Let Nymph Stay With You 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.

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.

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.

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?

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.

Thanks