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Business / Auto China

'Sharing economy' makes inroads into car industry

By Gordon Xie / Angus Miller (China Daily) Updated: 2015-03-10 07:44

The underlying concern among consumers is "getting in trouble" if the share car is damaged. Many respondents expressed concern over high financial costs or legal ramifications in the case of an accident.

Despite a lack of awareness, most Chinese consumers have a positive attitude toward car sharing. Strong growth potential exists and consumers can be persuaded by its benefits but the culture of asset ownership in China is a major hurdle to be overcome.

Companies need to consider how car sharing can complement traditional ownership, and leisure travel, business travel and ban day replacement are all examples of this. Companies should educate potential customers on the convenience and cost savings.

Car leasing, on the other hand, enjoys much greater awareness in China: 91 percent of the survey respondents were aware of car leasing but the majority still bought their vehicle using cash. Only 3 percent leased their car.

Consumers choose not to lease due to their desire for car ownership, which is still a status symbol in China. Generally, if consumers can afford to buy a car with cash, they will.

Many consumers have a misinformed, negative perception of leasing, but when given a short "sales pitch", 41 percent changed their minds. Of the 59 percent who were still not convinced, the most common reason again came back to a strong desire for car ownership.

Chinese consumers are driven by price but also the status attached to car ownership. Given that one of the key benefits of car sharing and car leasing is the opportunity to get behind the wheel of a potentially higher-end vehicle without capital outlay, both should make sense in China.

The fact that survey respondents cited cost as the main reason for not owning a car also underscores the potential of car sharing and leasing in the country.

To win the hearts and minds of consumers in China, companies must improve their understanding and engagement of potential customers. Engaging them early in the decision process and continuing that engagement throughout the customer lifecycle is key to educating them on the benefits of car sharing and leasing and winning their long-term loyalty.

Gordon Xie is a partner in automotive consulting and Angus Miller is a manager in customer strategy consulting at PricewaterhouseCoopers in the Chinese mainland and Hong Kong.

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