The Automobile Consumption Market Welcomes Consumers of Younger Generations

By Joe Zhang

According to data from the Traffic Administration Bureau of the Ministry of Public Security of the Peoples Republic of China， as of the end of 2020， there were more than 40 million driving license holders aged 18 to 24， indicating the great potential in the auto consumption market in China. For auto manufacturers in China， they have to adapt to an inevitable trend that consumers are becoming younger.

In recent years， Dongchedi （a platform providing car information and news） and Ocean Arithmetic （or the Trend Insight of Ocean Engine） jointly conducted a survey titled Potential Clients in the Chinese Auto Market（hereafter referred to as the Survey）， which reflected that 70.4% of young potential auto consumers in China had plans to buy a vehicle for themselves within 5 years， which is significantly higher than consumers older than 24.

The consumption potential of younger generations in the auto market lie mainly in the fact that they own fewer vehicles. 75% of young potential auto consumers currently dont own a vehicle under their own name， and a high ratio of them plan to buy one within 3 years or 3 to 5 years. As more and more younger consumers gradually release their consumption potential in automobiles， the automobile consumption market will usher in an era of younger generations.

Young consumers obtain information through the Internet and first-hand experiences offline

According to the survey， younger consumers now prefer collecting information through online platforms， and then prefer conducting a test drive and gaining first-hand experience in offline scenarios. This is true for more than 70% of young consumers when it comes to purchasing cars. Besides， the short decision-making chain is one of the most significant features of Chinese younger consumers when buying a car. More than 30% of respondents in younger generations said that they would make a decision within a week to a month， a ratio much higher than other groups over the age of 24.

At the same time， the survey indicated that of those young consumers who had plans to buy a car within 5 years， women accounted for nearly 30%， while this ratio was low as 10% in groups over 24. In addition， due to the significant differences between men and women in preferences for cars， the great increase in the number of independent female consumers will also have an important impact on the marketing plans of Chinese auto companies， boosting the construction of community and service network targeted at female car owners.

Compared to consumer groups aged over 24 who relied more on offline business models， Chinese young car consumers prefer the Internet to collect information for cars they are interested in， especially auto vertical platforms. According to a survey conducted by TikTok in China， 44.5% of young respondents believed the information from auto platforms would impact their decisions， meaning such platforms have a relatively more important role among various online platforms.

In February 2021， young Chinese users compared vehicle information on Dongchedi more than 5 million times. Direct comparisons of vehicle configuration helped young Chinese consumers make choices they were satisfied about quickly and efficiently. In addition to pictures and text， young consumers tended to watch long and short videos and live broadcasts， which have become important sources of information for some young auto buyers.

The popularity of short videos provides new access to information for people interested in automobiles. However， as a car is a typical durable consumer good， potential consumers have higher requirements for the detail and professionalism of information， which is what these auto platforms are made for. Pictures and text were still the most popular， since they are easy to save and used to create a comparison. Meanwhile other functions， such as quote references and model comparisons that are mainly presented as graphic information， are features for auto platforms to attract users.

For live broadcasts， consumers of younger generations showed significantly higher interest and enthusiasm. Of young respondents who had plans to buy a car in the near future， 17.5% intended to refer to information from live broadcasts， since live broadcasts directly support interactions which could provide convenient information acquisition for potential consumers.

Local brands became more popular

The survey indicated， similar to the overall market， Chinese， German and Japanese brands were still preferred. BBA （Benz， BMW and Audi） and Volkswagen took the lead amongst the most favored brands， while Honda and Toyota were highranking Japanese brands. Local brands from China attracted more and more attention， specifically four out of the top 10 and seven out of top 20 brands were Chinese. It is worth mentioning that the Chinese brand， Lynk & Co， which focuses on youth， interested most younger consumers.

According to data f rom Dongchedi， although SUVs still had obvious advantages in attracting consumers aged over 24， for younger generations， it seemed that they are more likely to prefer cars to SUVs. In terms of models， compact cars were still the first choice of young people in China， followed by medium and middle-large cars. Generally， a relatively high ratio of view times for car-related articles and videos were from young potential consumers， especially those for medium and compact cars.

In addition， young consumers were paying more attention to new energy vehicles， and this trend was more obvious in super metropolises like Beijing and Shanghai in which encouraging policies for new energy vehicles had been carried out. As the two major bottlenecks of charging and battery life are gradually solved， new energy vehicles will become a major choice for young Chinese consumers.

According to statistics from Dongchedi， besides traditional content related to car maintenance， used cars and auto parts， younger car owners paid more attention to modification to show personality and fashion， being responsible for 30% of the views on content related to modification. Besides， of the respondents who had modified cars， the younger car owners who had carried out moderate modifications to existing vehicles were relatively higher， and this ratio was even higher for younger car owners who expressed willingness to modify vehicles in the future. Whats more， more than 10% of younger car owners had spent over RMB 10，000 on modifications， indicating the great potential in the vehicle modification market in China. Whether a car is suitable for modification may also have a subtle influence on the choice of younger consumers when buying a car.

The luxury car market is solid

As mentioned above， younger consumers favor cars， bringing potential for the luxury car market in the future. According to the survey， 6.9% of potential young auto consumers have an annual family income of over RMB 500，000， higher than that （6.2%） of the group aged over 24. As part of the younger generation with a relatively higher consumption power， potential auto consumers can meet luxury car demand easily. In fact， more than half of the respondents already owned a car， and many had two or more cars.

Compared to those aged over 24， a larger proportion of younger consumers chose vehicles priced over RMB 500，000， demonstrating a high consumption power. On top of that 69.8% of respondents planned to buy another car within three years， and younger consumers who had no car were more willing buy a car in the future. Nearly half of the respondents stated that they planned to own a car within 2 years， and many of them might prefer one priced over RMB 500，000.

Its understood that， though they have fully demonstrated their consumption ability， there is great potential in younger consumers in the future， especially with regards to luxury brands which are targeting high-end and ultra-high-end markets. How to attract the youth with high consumption potential will perhaps become the key to luxury brands looking to develop competitiveness in the Chinese auto market within the next five years.

Besides， as auto finance products become popular， increasingly more young consumers begin to actively learn about auto finance before buying a car. As the last link in the automobile consumption chain， providing differentiated services of payment for young consumer groups may also be an important way for auto companies in China to improve sales performance.