Evolution in Chinese auto market expected to drive restructuring in global market: McKinsey

People visit the exhibition area of BYD, China's leading new energy vehicle (NEV) manufacturer, during the 19th China (Changchun) International Automobile Expo in Changchun, capital of northeast China's Jilin Province, July 15, 2022. (Xinhua/Zhang Nan)

Consulting firm McKinsey & Company on Thursday published a report of consumer research on China's automobile market, indicating that the market landscape, along with consumer habits and brand awareness are evolving under the rapid development of smart electric vehicles (EVs).

It is expected that Chinese carmakers are to bring more cost-effective models to overseas consumers, promoting structural changes in the global auto market. According to a McKinsey forecast model, in the ten years from 2021 to 2030, a total of about 800 million passenger vehicles are expected to be sold globally. The sales of EVs should reach about 220 million, of which the EV sales in the Chinese market is likely to account for nearly 50 percent, meaning around 100 million EVs are predicted to be sold in the Chinese market through the ten years.

The result of the consumer research unveiled new characteristics of the Chinese auto market, which are expected to shape the technological evolution, business model and competition pattern of the automobile industry in the next five to ten years.

With consumption upgrading remaining a mainstream purpose for buying cars, rational customers are taking up increasing proportion among Chinese consumers. At the meantime, EV buyers in China are holding quite different brand awareness than traditional fuel vehicle buyers, making international auto brands posting less brand advantage.

The research shows that EV consumers in China are showing increasing loyalty, which results from the satisfying vehicle performance and customer experience, encouraging EV makers to promote all-round customer management to cultivate sustainable competence.

Automobile companies that are ready to embrace the trend of smart electric vehicles should make specific efforts in brand repositioning, according to the McKinsey report. It is also important for the companies to balance between the investment and return of EV and intelligent vehicle business, build all-channel marketing networks both online and offline, as well as create new business models along the supply chain, said the report.