Retail in Asia

In Sectors

Luxury automakers in China are getting smart about eCommerce

Buying a car used to be about going to the dealership and speaking with a salesman in person, but in China, with a growing market of digital native millennials, e-commerce is everything.

The latest report by digital intelligence firm L2, “China: Luxury Auto,” says that more than half of Chinese consumers are “willing to purchase a car online,” and car companies are beginning to listen. Accessible luxury car makers, like Mercedes-Benz, Audi, and BMW, are leading the way in functionality of their e-commerce websites, according to the study, which looked at 18 luxury car brands in China.

However, when it comes to ultra-luxury car brands, automakers have some catching up to do. While 10 out of 18 of the luxury and ultra-luxury brands in the study had a shop on Tmall, in the ultra-luxury category, only one car brand, Maserati, hosts a site on Tmall. “Ultra-luxury brands are worried about seeming too mass market, and they’re wary of any kind of use of digital technology, marketing, or e-commerce having an effect on their brand history and heritage,” Liz Flora, editor of Asia-Pacific research for L2, said. “In China, that’s creating a huge differentiation between the availability of certain information and e-commerce among the brands.”

Alibaba has already been working to boost the legitimacy of its online shop to car consumers through its Singles’ Day (November 11) campaigns. Last year, Tmall and Taobao sold 100,000 vehicles over the course of the day, and while Maserati didn’t sell actual cars, it sold 50,000 RMB ($7,290) vouchers that buyers could bring into the dealership to go towards the purchase of its Levante SUV.

SEE ALSO: Luxury retail hits the wall

About 77 percent of Chinese consumers said they would be willing to buy a new car online, and offering this option can be especially useful for car brands wanting to sell to consumers in cities in China without dealerships present. On Tmall, the Volvo XC60 is the best-selling model, and its success is hardly surprising—the carmaker’s Chinese parent company Geely was the first automaker to have a flagship shop on Tmall five years ago, according to the report.

But many auto brands only have mass models available online, so it’s particularly important that they offer online-to-offline features on their websites to bring customers into the dealership. L2’s study suggests carmakers are not meeting their potential in this respect. For example, while all of the accessible luxury car brands with e-commerce sites in China offer online booking, only 83 percent of ultra-luxury ones do.

There is plenty of room for luxury auto companies’ e-commerce presence to grow overall, according to L2. “They’re much further behind in their website capabilities than they are on their English language sites, even thought it’s much more important to have this digital development in China,” Flora said. This is clear in the numbers: about 98 percent of the brands feature car configurators on their English-language websites, compared to just 67 percent of luxury car brands’ Chinese sites and 50 percent of ultra-luxury carmakers.

As automakers compete for new consumer segments in China, some brands are making efforts to take their presence even further into the digital sphere. Last year, for example, Mercedes-Benz opened an experience center in Beijing to woo a younger generation of aspiring luxury consumers through social media and offline events. L2’s study emphasizes that it pays to capitalize on digital technology in a market that’s increasingly leaving brick-and-mortar sales behind.

Jing Daily logoThis article was written by Jessica Rapp for Jing DailyJing Daily is the leading digital publication on luxury consumer trends in China. Professionals seeking to understand China’s complex and rapidly evolving luxury industry look to Jing Daily for fresh and accurate insights. We publish up-to-the-minute news updates, reports on key trends, insights from leading industry figures, and in-depth analysis on this vitally important market.