The Effect of Perception on Car Sales

In early 2009 China’s government began the “Automobile Industry Adjustment and Stimulus Plan” designed to stimulate China’s domestic car market. The policy had some success at first, now however the domestic market has largely stagnated and appears it will lost ground as the brief experiment with domestic made cars comes to an end. Reports from Shanghai have 9 out of every 10 cars in the province as foreign. For everyone in the auto industry this is the fight to watch. By 2020 economists predict their will be a billion potential customers in China’s market. The rewards for survival are there but the tools for survival might not be. Many of the car companies that took advantage of the stimulus in 2009 like Chery are losing money because they have attempted to covet the lower end of the market and have failed. These companies are only selling car in second and third tier city’s and even their foreign brands are competing strongly.

In our Japanese economy class we discussed how perceptions of cars in China differ from perceptions of the same cars in the rest of the world. For example BMW in china is perceived as the car of young reckless children of rich parents while buick is the car for up and coming members of the business world. Perceptions of Chinese cars are almost non-existent. While the Chinese do want to buy chinese cars the lack of a brand identity for the chinese domestic companies is hurting sales.

2 comments to The Effect of Perception on Car Sales

  • For my Chinese Economy class (Econ274.academic.wlu.edu) we read Michael Dunne’s American Wheels, Chinese Roads as a study of direct foreign investment in manufacturing. So here’s a challenge: what is the downside of having Buick a leading brand? In what sense is it not “Chinese”? What gains from pushing purely domestic brands (though I’m not sure how to define)?

  • gjeong

    If we look at the best sellers in the Chinese car market, there is only one Chinese car brand in the top 20 (20th.) It is called 帝豪. VW is still a dominant brand in the market, and the Chinese cars are still not consider as the good cars. Even the Chinese do not buy their cars. As we learned in the class, the CEOs and the owners of Chinese car companies should start making tough and creative decisions to raise their sales.

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