Capturing the "second car" and "ugrading" market

Automologist, LILY, shares with us her observations on how automakers are capturing a particular market segment, particularly in China.

General Motor forecasted that from now till 2019, there will still be a yearly growth of 6% to 7% in the Chinese auto market sales. Currently, 30% of the car purchases are of second cars or upgrades; by year 2020, this segment will increase to 70%. I believe that car engineers and manufacturers are questioning themselves: “how can I convince customers to remain loyal to my brand when they upgrade or buy a second car?”. Research shows that it is six to seven times more expensive to acquire new customers than to sell to existing ones.

Enhancing customer experiences with their products by upgrading current models with more state-of-the-art features is one way; introducing new models targeted to repeat customers is another.

GM is using the second method in its expansion to capture this category of customers. China contributes a third of GM’s global sales, and for this reason, GM’s CEO Mary Barra (pictured left) has personally visited China many times. She is a results-oriented person who believes that success is not a simple task; she thinks that GM needs to catch up with the competitors in terms of profit. Her next move is to strengthen the Cadillac brand and introduce other luxury models in China, with the focus on deploying technology that ensures not only a “good car”, but also a good customer experience.

Consumers have very high expectations in regards to the deployment of technology - they wish to have safety, convenience and connectivity; for the last part, GM introduced 4G LTE-equipped models in the USA, and will extend the feature to Europe and China, with Cadillac taking the lead in this application. V2I (vehicles and infrastructure) and V2V (cars and trucks) inter-connected technology will be launched with Cadillac models in 2016 in China.

In terms of enhancing the features of current models, the designer needs to be cautious that the car is not overloaded with tools until complexity creeps in without realization. Technology moves fast, but the life cycle of a car moves at a slower pace; by adding the latest technology into cars at the same speed of technology development may or may not be the best idea. There are times when OEM’s have yet to understand how the current system works but they are already deploying the next new technology just to keep up the pace. They might be able to provide the latest features to customers but fail in enhancing customer experience and satisfaction by delivering all the benefits of the product.

“It is better to have fewer things of quality than too much expandable junk.”