The automotive market in china presentation by Daxue consulting

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April. 2019
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THE AUTOMOTIVE
INDUSTRY IN CHINA
By DAXUE CONSULTING
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© 2019 DAXUE CONSULTING
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ABOUT
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Daxue Consulting is a China focused market research
company dedicated to providing the best specially tailored,
high-quality, customer specific data in one of the most
challenging markets in the world, China.
Matthieu David
Experton
CEO & FOUNDER
‚Our mission is to answer complex
market questions through traditional
methodologies & tech tools‛
YOUR MARKET RESEARCH COMPANY IN CHINA
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VALUES, PRINCIPLES, AND VISION
Responsibility at all levels
International team
collaborates to bring new
perspectives in solving
challenges
Empowerment through
comprehensive management
Loyalty to our clients
Comprehensive, scientific,
and logical reasoning
Transparency of sources
and information
Efforts are always rewarded
within the team
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60% BUSINESS TO CONSUMERS
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THEY QUOTED US
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MARKET RESEARCH
MARKET ENTRY
PARTNERSHIP SCREENING
REGULATORY FRAMEWORK
CONSUMER JOURNEY
PRODUCT TESTING
BUSINESS PLAN
COMPETITOR BENCHMARKING
DIGITAL STRATEGY
MARKET POTENTIAL
ASSESSMENT
MARKET SIZING
OMNI-CHANNEL STRATEGY
OUR SERVICES
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DESK RESEARCH
SMART CALLS
STORE CHECKS
FOCUS GROUPS
MYSTERY SHOPPING
CHINESE NAMING
IN-DEPTH INTERVIEWS
UX/UI TEST
ONLINE & OFFLINE SURVEYS
PARTNER/DISTRIBUTOR
SCREENING
SOCIAL LISTENING
SENSORY TESTING
OUR RESEARCH METHODOLOGIES
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BIG-DATA ANALYSIS
TRAINING SESSIONS
DUE-DILIGENCE
E-COMMERCE ANALYSIS
TRADE MISSIONS
BRANDING
ETHNOGRAPHY STUDY
A/B TESTING
WEBSITE OPTIMIZATION
SHOP-ALONG
EYE-TRACKING
UX/UI DESIGNING
OUR RESEARCH METHODOLOGIES
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A selection of tools leveraged by us
MODERN RESEARCH TOOLS TO STAY AHEAD
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16
OVERVIEW I. MARKET OVERVIEW
1. SECOND-HAND VEHICLES
2. DISTRIBUTION & PROMOTION
II. NEW ENERGY VEHICLES
III. FUTURE OF MOBLITY
IV. NEW RETAIL
V. AUTO FINANCING
VI. CASE STUDIES
VII.MARKET TRENDS

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17
MARKET OVERVIEW
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How to purchase a car in China?
Basic process of car purchasing in China
18
Purchasing channels1 2 Payment methods 3
4 5 6
Car insurance
Taxes Car inspection License plates
There are two purchasing channels
• Online (e-commerce platforms, such as
Autohome 汽车之家 and Taoche 淘车)
• Offline ( such as 4S stores).
Some Chinese consumers take out loans to
afford a car. Auto loans mainly come from
banks and auto finance companies.
Car insurance is offered by most insurance
companies, 4S stores also provide insurance.
Insurance from online platforms may have
up to a 15% discount.
Must pay purchase
tax to the National
Tax Bureau, the
purchase tax rate is
10% for fuel vehicles.
(No purchase tax for
new energy vehicles)
New car inspection in the
local vehicle administrative
office. Car owners need
offer quality certifications,
fapiao, certificates of tax
and other relevant
documents.
Apply for license
plates auction or
lottery on the
website of vehicle
administrative
office.
Source: http://www.bitauto.com

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Consumption and market size in China
 By the end of 2017, China’s vehicle sales saw over 20 years of growth.
 2018 marks the first year of declining vehicle sales (not including second-hand vehicles), fell 2.8% YOY.
13.60
16.00 16.80 17.60
21.10
23.49
24.60
28.03 28.88 28.08
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Vehicle sales in China
(million units–2009-2018)
Source: China Association of Automobile Manufactures,
http://cv.ce.cn/zxz/zxzbwzg/201901/14/t20190114_31254856.shtml
http://www.chyxx.com/industry/201801/604283.html
22
Market segments Sales in 2018 YOY growth
Passenger vehicles 23.71 million units -15.8%
Sedan 11.52 million units -14.3%
SUV 9.99 million units -16.3%
MPV
(multi purpose vehicle)
1.73 million units -22.9%
Crossover vehicles 0.42 million units -9.7%
Commercial vehicles 4.37 million units 5.2%
Trucks 0.48 million units -13.9%
Buses 3.88 million units 9.6%
Source: China Association of Automobile Manufactures
http://cv.ce.cn/zxz/zxzbwzg/201901/14/t20190114_31254856.shtml
Sedan: also saloon, is a passenger car in a three-box configuration with separate compartments for engine, passenger, and cargo
MPV: multi purpose vehicle, it is typically a large hatchback with seating for six or more.
Crossover vehicles: they are terms predominantly used in the United States for vehicles with SUV styling features that are based on passenger car platforms and are only intended for light off-
road use.

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China’s vehicle sales by provinces
The vehicle sales highly connect with local economy growth, provinces with high GDP usually have higher sales.
0-200,000
200,000-400,000
400,000-600,000
600,000-1,000,000
> 1,000,000
Geographical distribution of vehicle sales in China
(sold units-2018)
23
2018 vehicle sales mainly came
from east and south China, those
provinces usually have higher
GDP, but the slowdown of
economy in many provinces
made the decreased car sales in
2018.

Guangdong had the highest
vehicle sales and YOY growth
among all provinces in 2018, its
fast growing local economy is a
important reason. (Guangdong
has had the highest GDP for 29
years in China).
Guangdong province,
2.57 million sold units, 5.3%
YOY growth
Shandong province,
1.56 million sold units,
-11.2% YOY growth
Jiangsu province,
1.7million sold units,
-6.9% YOY growth
Zhejiang province,
0.7% YOY growth
Hebei province,
-12.2% YOY growth
Sichuan province,
-4.5% YOY growth
Source: 2018 vehicle consumption report , by China Automobile
Dealers Association (CADA)
Henan province,
-7.5% YOY growth

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Sales compared to other top countries
 Although China’s vehicle sales declined in 2018, they still represented around 30% of the total global
sales and much higher than other countries (1.6X USA, 1.7X EU and 5.5X Japan) during the same period.
 Thus, China is still the largest automotive market in the world.
5.23
16.50 17.00
28.08
Japan EU USA China
Vehicle sales in Japan, EU, USA and China
(million units–2018)
24Source: 2018 vehicle consumption report , by China Automobile

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Market shares of auto brands by countries
Among foreign brands, German brands are the best-selling in China, thanks in particular to BMW and Volkswagen,
which are benefiting from the government's announcement about relaxing its rules on joint ventures.
Chinese brands
42%
German brands
22%
Japanese brands
19%
American brands
11%
South Korean
brands
5%
French brands
1%
Market shares of passenger vehicle brands
by countries (2018)
Source: China Association of Automobile Manufactures
25
Sales decreased 7.4%
compare with 2017
Source:https://baijiahao.baidu.com/s?id=1623414728281295784&wfr=spider
&for=pc
Sales decreased 18.5%
compare with 2017
Sales increased 4.5%
compare with 2017
Sales increased 5%
compare with 2017
Sales increased 10%
compare with 2017
The sales of Chinese
and American auto
brands both
decreased in 2018.

Vehicles from
Germany, Japan and
South Korea increased
their sales in 2018.

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Top selling models in China in 2018
 In 2018, Volkswagen had the best performance with 4 models in the top 10. The Nissan Sylphy recorded strong
growth, thanks in particular to the Nissan Sylphy Zero Emission launched at the end of 2018.
 In this top 10, only 3 brands are Chinese, which shows the continued interest of Chinese buyers for foreign car
manufacturers.
26
Rank
2018
Rank
2017
Brand
Countries of
origin
Car Models
Sales 2018
(units)
Sales 2017
(units)
+/- 2018
1 2 Volkswagen German Lavida 503.825 517.255 - 2.6%
2 5 Nissan Japan Sylphy 481.216 404.726 +18.9%
3 1 Wuling China
Wuling
Hongguang
476.538 532.394 -10.5%
4 3 Haval China H6 452.552 505.944 -10.6%
5 9 Toyota Japan Corolla 374.400 336.763 +11.2%
6 6 Baojun China 510 361.403 358.877 +0.7%
7 11 Volkswagen German Jetta 327.685 317.637 +3.2%
8 10 Volkswagen German Sagitar 309.902 327.062 -5.2%
9 7 Volkswagen German Tiguan 307.896 347.328 -11.4%
10 16 Hyundai South Korea Elantra 284.284 280.184 +1.5%
Sources: automative industry portal - Marklines

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Main reasons for declining auto sales (1/4)
Car-hailing apps have
been gaining popularity
in China. By the end of
2018, there were more
than 100 car-hailing
platforms in China, such
as Didi Chuxing, Uber
Technologies and
CAOCAO.
The Chinese economy
advanced 6.4 percent
year-on-year in the
fourth quarter of 2018,
after a 6.5 percent
growth in the previous
quarter and matching
market expectations. It
was the lowest growth
Source：TRADINGECONOMICS.COM, NATIONAL BUREAU OF STATISTICS OF CHINA
Slow down of China’s economic growth Online car-hailing services
Unlike taxi-hailing services, car-hailing apps also provide tailored
taxi service, ride sharing and etc. In 2018, the total number of car-
hailing app users has exceeded 330 million in China.
rate since the global financial crisis. The country's economy was
still in a period of adjustment and facing downward pressure. So
decreasing purchasing power and the vulnerable
macroeconomic environment pose as threats to the automotive
marketers.
27
Source：http://www.199it.com/archives/839768.html
http://www.askci.com/news/chanye/20190302/1805061142617.shtml
21.20
26.78
32.12
38.40
2017 2018 2019F 2020F
The market size of car-hailing services in China
(billion RMB)

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Customers’ changing habits Vehicle purchase policiesTrade Dispute
The recent US-China trade tensions has caught
the attention of many global business
communities, and results in negative outlooks.
• Decreased auto imports
• Increased production cost
• Increased auto tariffs
Key trading statistics (2018) % Change
China vehicle import -13.0%
China vehicle export +24.1%
Chinese car shoppers are increasingly value
minded—and open to alternatives to buying
new cars.
“I can live without a car, and I can rent when
I need a car.”
“If the cost of long-term leasing is roughly
the same as buying a car, I would prefer
leasing.”
“I do not mind co-owning and sharing a car
with others.”
Source: US-China Trade Dispute and its Impact on the Chinese Auto Market, Pwc Report 2018
Finding the fast lane: Emerging trends in China’s auto market, Mckinsey Survey 2016
https://www.sciencedirect.com/science/article/pii/S0301421517304895
Vehicle purchase restriction
Beijing, Shanghai, Shenzhen, Guangzhou, Hainan
and other cities have proposed vehicle purchase
restrictions to control the rapid growth of vehicle
ownership and ease the congestion of urban traffic.
127
149
170
189
16.51% 20.18%
19.27%
17.43%
0%
10%
20%
30%
0
50
100
150
200
2015 2016 2017 2018
# registered private cars in China
Growth rate
In million
Compared to the year of 2017, Chinese government
proposed to raise the vehicle purchase tax from
7.5 % to 10%.
Increased car purchase tax
28

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29
Source: http://chepai.alltobid.com/contents/22/281.html
http://xqctk.sztb.gov.cn/bszn/20171206/1512524976335_1.html
• License plate cost and restrictions-Shenzhen
In China, policies related to license plate application are proposed nationwide. Customers from big cities are major purchasing segments, while in
these 1st-tier cities (Beijing, Shenzhen, Guangzhou, etc.), it is more and more difficult to apply for license plates, which are strictly required for
owning a car. For example, rate of success to applying license plate in Shenzhen in 2018 were around 20%（by lottery).
2,502 3,342 2,944 2,926 2,912 2,942 2,956 2,933 2,934 2,925 2,928 2,922
5,599
28,093
29,718
24,334
18,208
15,058
13,983 14,082 14,049
13,414
13,615 14,198
44.69%
11.90%
9.91%
12.02%
15.99% 19.54%
21.14% 20.83% 20.88%
21.81%
21.51% 20.58%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jan Feb March April May June July August Sep Oct Nov Dec
Release of licenses plates in Shenzhen
(2018)
Number of plates distributed Number of applicants Success rate

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License plate cost and restrictions-Shanghai
30
Source 51chepai.com graph by daxue consulting
80.19%
52.07%
5.45% 4.65% 7.61%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Jan-09
Jun-09
Nov-09
Apr-10
Sep-10
Feb-11
Jul-11
Dec-11
May-12
Oct-12
Mar-13
Aug-13
Jan-14
Jun-14
Nov-14
Apr-15
Sep-15
Feb-16
Jul-16
Dec-16
May-17
Oct-17
Mar-18
Aug-18
Jan-19
What % of Shanghai’s license plate applicants receive a plate?
• Starting in 2014, the chances of getting a license plate in Shanghai’s
system is near 5%
• Although the amount of applicants has been slowly on the decline,
the chances of receiving a plate has not increased much
A non-commercial driver has three license options all with different
restrictions. Through Shanghai’s lottery, a driver can receive the license
plate with no driving restrictions.
AA, B, D and E level license plates
have no driving restrictions
CC level license plate is only allowed
to drive in Shanghai’s suburbs
沪A
沪C
Drivers can also use plates from other
provinces, but cannot drive on highways
during weekday rush hours
外

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License Lottery
Application Activity
License Auction
Commercial Activity
License Plate Restrictions in China (1/3)
License auction & License lottery
31
• Definition: Commercial activities for
public auction of license plates
• Object: Dampen increase of cars
• Auction service charges
• Unstable price
• Asymmetric information (the selling
party doesn’t own the info of buyers)
• Highest bidder wins the license
• More efficient
• Definition: License plate application
activity in a vehicle-restricted city
• Object: Dampen increase of cars
• No entry fee
• Stable price
• Symmetric information (the selling
party knows the info of buyers)
• Equal probability of winning
• More fair
Source: CKGSB knowledge, Restrictions on New Car Purchases: An Economist's Road Trip, http://knowledge.ckgsb.edu.cn/2014/07/09/policy-and-law/restrictions-on-new-car-purchases-an-economists-road-trip/;
Sustainable Transportation Seminars Stanford University, Auction vs. Lottery - China’s Experiments in Managing Automobile Growth, https://peec.stanford.edu/sites/g/files/sbiybj9616/f/5-10-13_zhao.pdf;
V.S

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The implementation in eight cities
32
Eight cities including Beijing, Guiyang,
Shanghai, Guangzhou, Tianjin,
Hangzhou, Shenzhen and Hainan
(province) have implemented license
plate restrictions through three
different means of policies.
SH
AUCTION LOTTERYAUCTION
&
LOTTERY
BJ
GY
GZ TJ
HZ SZ
HN
Source: Information revealed by Chinese government
Auction + Lottery
The combination of two models make it possible to satisfy
the requirements of different groups of people. Therefore, it
can be recognized as an improvement from the previous
policy.

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How to get a license plate in China: auction vs. lottery
33
V.S
License auction process
(taking Shanghai as example)
1
Qualifications
• Must be 18 years old with a
driving license
• Must be local or have a
residence permit
Registration process
• Purchase bidding document
• Register online
• Pay
• Receive auction card & password
2
Bid bond CN¥2000.00
Handling fee CN¥100.00
3
Auction
• Participate in the auction online
Auction window
Resident ID card Resident permit
(Shanghai)
License lottery process
(taking Beijing as example)
1
Qualifications
• Must be 18 years old with a
driving license
• Must be local or have a
residence permit
Resident permit
(Beijing)
Application process
• Apply online
• Pass exam & verification
• Get the application code
2
3
Lottery
• Participate in the lottery and
wait for the result
Automatically participate
in the next round within
the validity period of the
code.
Source: Information revealed by Chinese local government

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Alternatives to private cars in China
 One of the main reasons for China’s decline in car sales in 2018 is that there are many alternatives, especially in big
cities.
 The younger generation of Chinese is increasingly sensitive to environmental issues and consider more
environmentally friendly options.
Alternatives for urban Alternatives for long distance
travel1 2
Bike-sharing
Taxis
Subway / Bus
Taxis
Train

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For a person living 8km from work
Comparing the different possibilities to go to work
The car is excessively more expensive than any other type of transport. Thus, the majority of Shanghai residents who live near
their work opt for the metro, which they often combine with bicycles to make connections.
1 RMB/30min
25-30min to go to
work/day
1 year ≈ 528 RMB
4 RMB/journey
+ 20 RMB deposit
20-25min to go to
work/day
1 year ≈ 2,220 RMB
30-40 RMB/journey
25min to go to work/day
1 year ≈ 15,000 RMB
4,000 RMB insurance
2,000 RMB maintenance
12 RMB fuel fee/day
120 RMB parking fee/day (15
RMB/hour)
1 year ≈ 40,000 RMB
(excluding price of the
car and license plate)
Assuming the car is
100,000 RMB, since
it’s the most common
car price in China
Source: http://www.chajiaotong.com/fagui1/85312.html
Didi app, Mobike app, Youjia.ChamCp.com

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Comparing the different possibilities to go to work
For a person living 16km from work
1 RMB/30min
More than 1 hour to go
to work
1 year ≈ 1,056 RMB
4 RMB/journey
+ 20 RMB deposit
40min to go to work
1 year ≈ 2,220 RMB
60-70 RMB/journey
45min to go to work
1 year ≈ 30,000
RMB
4,000 RMB insurance
2,000 RMB maintenance
24 RMB fuel fee/day
120 RMB parking fee/day(15
RMB/hour)
19.2 RMB transit fee/day
Total costs in 1 year ≈
46,800 RMB
(excluding price of the
car and license plate)
For someone who lives far from work, driving may seem more convenient, but the transit fees and parking fees increase the bill, and
in major cities traffic can be very congested. Since driving brings very few advantages for urban residents, convenience is not the
driving factor behind car purchases in urban China.
The car’s price is
100,000 RMB, since
it’s the most common
car price in China
Source: http://www.chajiaotong.com/fagui1/85312.html
Didi app, Mobike app, Youjia.ChamCp.com

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Why and when do people use sharing bicycles in China?
Intermodality: bikesharing enhances connectivity to buses and subway stations
37
In Shanghai, 90% of Mobike trips start
around a bus station and 51% of trips start
near a subway station (2018).
Approximately 1 in 5 sharing-bike users
take bikes to make subway and bus
connections (2017).
Advantages of using Mobike instead of cars in Shanghai:
 Cheaper and easier (no deposit, no maintenance, easy payment)
 Eco friendly
 No need to find parking
 Health benefits: 1 of 3 users cycle for exercise in China
 Ideal for short distances
Disadvantages:
 Only for one person
 Longer/exhausting
Sources: Mobike White Paper Report 2018 ; Asia fitness today
https://max.book118.com/html/2018/0429/163822846.shtm
Cycling is therefore a good alternative to cars in China's major cities. However, it is only a complementary
means of transport. Bike can be a competitor to the car but only for short distances.

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Travel Costs From Shanghai to Hangzhou (1/3)
38
Driving a
car
Journey time
Journey cost
Shanghai
Hongqiao Railway
Station
Hangzhou
East Railway
Station
Total Time
2h30min - 2h48min
Transit fee
CN¥ 80.00-90.00
Total Cost
Gas price range
CN¥6.58 - 7.39 / L
Fuel
consumption
7-10L / 100km
Distance
180km
CN¥173.91 – 238.00
We suppose the drive starts at
Hongqiao station and ends at
Hangzhou East station
Gas price in SH in March 2019
General consumption of vehicles
with 1.5 to 1.8 liter engine
Source: Baidu map; Baidu Zhidao; Youjia.ChamCp.com
Parking fee
CN¥10.00-15.00/h

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39
High speed
railway
Journey cost
Journey time
Metro HSR
Taxi / DiDi
Metro
Metro is the transport mostly
taken by Shanghai citizens.
5min – 120min 60min
(arrive at the station 30
minutes before departure)
5min – 60min
5min – 60min
Total Time
1h40min - 4h30min
Route 1
Route 2
Metro ticket
CN¥3.00 – 14.00
HSR ticket
CN¥73.00
Taxi cost
CN¥11.00 – 80.00 Total Cost
CN¥87.00 – 167.00
Metro ticket
CN¥3.00 – 14.00
HSR ticket
CN¥73.00
Metro ticket
CN¥2.00 – 9.00
Taxi fare in Hangzhou
Price CN¥11.00 CN¥2.50 / km CN¥3.75 / km
Distance Within 3km 3 – 10km Over 10km
* Didi shares similar charging standard with taxi (more expensive after 23:00)
Total Cost
CN¥78.00 – 96.00
Most HSR from
SH to HZ leaves
from Hongqiao
railway station.
Taxi
Source: Baidu map; 12306.com: Didi app

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40
Didi
Journey time
Journey cost
Shanghai
Hongqiao Railway
Station
Hangzhou
East Railway
Station
Total Time
2h30min - 2h48min
Distance fee
(based on time interval)
Distance
180km
Total Cost
14+(180-
3)*2.3+150*0.6+
(180-20)*0.8
-
14+(180-
3)*3.2+168*0.7+
(180-20)*0.8
CN¥639.10
–
826.00
We suppose the driving journey
starts at Hongqiao station and
ends at Hangzhou East station
Source: Baidu map; Baidu Zhidao; Youjia.ChamCp.com
Minimum fare
(within 3 km)
CN¥14.00
Normal hour CN¥2.30/km
22:00 – 00:00 CN¥3.20/km
00:00 – 05:00 CN¥3.20/km
Time
150min – 168min
Time fare
(based on time interval)
Normal hour CN¥0.60/min
22:00 – 00:00 CN¥0.70/min
00:00 – 05:00 CN¥0.70/min
Distance
based
surcharge
(Charge for the
distance above
20km)
CN¥0.80/km

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Consumer analysis: motivation to buy cars
Road trips (by private cars), commuting to work and family are the main reasons for buying a car in China.
41
51.35%
58.60%
21.40%
17.25%
5.20%
49.45%
52.80%
25.65%
17.20%
4.80%
Commuting to work Road trips Pick up their
children
Business Others
The main purposes of buying a car in China
(2017)
Consumers from Tier-1 and Tier-
2 cities
Consumers from Tier-3 and Tier-
4 cities
Source: http://www.sohu.com/a/245964021_606543
Baidu map; Mafengwo; Chinese driving tour market analysis report
In Tier-3 and Tier-4 cities, school busses
are uncommon, many parents need
safe and convenient transportation for
their children.
Picking up children
Although China has well-developed
public transportation in cities, some
people still drive to work as they live in
suburbs without subway lines.
Commuting to work
Driving is increasingly popular for
commutes between cities, especially for
those with high income and children.
Road trips

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Consumer analysis: Travel by car in China
42
Source: Baidu map; Mafengwo; Chinese driving tour market analysis report
Number of people traveling by cars in China
580
Million
Increased
by 35.6% Chinese travelers believe
autonomy can increase the
quality of travel
15.4%
36.7%
28.7%
15.2%
4.0%
18-26 26-30 31-40 41-50 50+
Age distribution of those who travel by car
Average mileage of tourism by driving cars
300km ≈ 4.5 hours
Drive their
own cars
58.3%Rent cars
at
destinatio
n 14.8%
Both
acceptable
26.9%
Options on traveling by cars
With the rapid development of
aviation and HSR networks, car
rental (upon arrival of destination)
has become an essential service,
attracting more consumers in a
more convenient and economical
way.
2017 2018

ALL RIGHTS RESERVED
Consumer analysis: Why Chinese people travel by car?
1. Flexibility and freedom
There are fewer limitations when travel by private cars since tourists can arrange their journey freely. They
have great autonomy in the choice of tourism destinations, arrival time, stay period and accommodations.
2. Limitation of holidays
Most holidays in China are around 3 days (except for the National Day and Chinese New Year). The short
holidays mean Chinese tourists could only travel to nearby destinations. Under this circumstance, road
trips are suitable.
3. Traveling with family (minimum 3 people)
Many Chinese tourists are willing to travel with family. Meanwhile, most private cars used by Chinese
people can carry 4-5 people, such as compact cars and SUVs. So, traveling by private cars is more suitable
for small tourist groups with high level of privacy and freedom.
4. Driving for pleasure / Enjoy the view along the journey
Tourists can better experience scenery when driving, to a much greater extent than trains or planes.
Many tourists believe this brings value to the trip.
Source: Mafengwo; Why you choose to travel by car,
https://baijiahao.baidu.com/s?id=1610551310029446512&wfr=spider&for=pc; Chinese
family trip market analysis in 2018;

ALL RIGHTS RESERVED
44
Consumer analysis: who are the main buyers?
 Post-90s and Post-80s men are the main vehicle buyers in China in 2018.
 Compared to the United-States where 65% of new vehicles purchases are made by women, Chinese
women are small buyers of cars.
10%
48%
26%
16%
Age distribution of the vehicle buyers in
China (2018)
Post-70s Post-80s Post-90s Others
87.6%
12.4%
Gender distribution of the vehicle buyers in
China (2018)
Men Women
Source: 2018 vehicle consumption report , by China Automobile
Source:2018-2019 China’s automotive market report,
Mobdata, Win’s, Power XENE Digital Technology

ALL RIGHTS RESERVED
Consumer analysis: purchasing behaviors by generations
 Post-80s consumers focus on both design and quality, 4S stores are their favorite purchasing channels.
 Post-90s consumers have more personalized requirements during their purchasing, some of them like
collecting info and buying cars on e-commerce platforms, such as Autohome (汽车之家) and Weacar (蔚
车).
Post-80sPost-90s
• Purchasing Behavior
Focus on vehicles’ appearance and design, high demand
for vehicle multimedia, willing to try personalized
customization and unique styles/designs.
• Purchasing Channels
Except for offline stores, also like e-commerce platforms
and mobile apps of car brands
• Purchasing Behavior
Prefer vehicles with bright colors and high performance,
interested in large space vehicles (such as SUV), willing to
pay for additional equipment.
• Purchasing Channels
Mainly from offline 4S stores
45Source: 2018 vehicle consumption report , by China Automobile

ALL RIGHTS RESERVED
Consumer analysis: what types of vehicles are preferred
86.3%
56.8%
21.4% 21.3%
14.6%
SUV Compact cars MPV Mid-size vehicles Mini vehicles
The main vehicle types favored by Chinese
consumers (2018)
46
SUV is still a very popular type of vehicle in China,
although its sales decreased in 2018 by 5.5%.
Consumers’ favorite vehicle price is 100,000-150,000
RMB, especially people between 25-34 years old.
In 2018, SUVs are Chinese people’s favorite type of car. Also, new energy SUVs are growing rapidly
with policy support, which further expands the market for SUVs.
5.2%
13.1%
18.4%
50.8%
12.8%
9.5%
9.3%
14.3%
2.4%
13.1%
lower than 50
50-80
80-100
100-150
150-200
200-250
250-300
300-500
500-700
Above 700
How much Chinese consumers will pay for
new cars (thousand RMB –2018)

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56
Second-hand vehicles
56

ALL RIGHTS RESERVED
Second-hand car market shows growth in China (1/2)
Second-hand car sales rise in 2018 with a growth of 10.3%. Sales are even expected to reach over 20
million in 2019 which worries car manufacturers but can also can create new business opportunities.
59
The sales of second-hand
vehicles have been growing
for years in China
Source: China Association of Automobile Manufacturers
Car Types Sold units in
2018
Year-on-year
Growth
Sedan 8,222,000 +11.56%
SUV 1,135,600 +30.83%
MPV 781,900 +8.09%
Crossover cars -- -12.20%
Truck 1,222,800 +9.48
Bus 1,467,800 +10.18%
Distribution of Second-Hand Car Sales
9.42
10.39
12.40
13.82
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
2015 2106 2017 2018
Millionunits
Sales of second-hand vehicles in China
(million units – 2015-2018)
Source: askci.com
https://baijiahao.baidu.com/s?id=1620811216338670302&wfr
Sedan: also saloon, is a passenger car in a three-box configuration with separate compartments
for engine, passenger, and cargo
MPV (multi purpose vehicle): it is typically a large hatchback with seating for six or more.
Crossover vehicles: they are terms predominantly used in the United States for vehicles with SUV
styling features that are based on passenger car platforms and are only intended for light off-road
use.

ALL RIGHTS RESERVED
Second-hand car market shows growth in China (2/2)
 The sales of second-hand vehicles mainly came from coastal provinces and a few inland provinces with fast
growing economies. People living in developed places tend to buy used cars instead of new vehicles.
 In 2018, more than half of the sold second-hand vehicles were cheaper than 50,000 RMB. Which means low price is
an important reason attract Chinese consumers to buy used cars.
60
38.20%
18.20%
17.40%
11.50%
4.70%
7.70%
2.30%
Price range of sold second-hand cars
(thousand RMB-2018)
<30
30-50
50-80
80-120
120-150
150-300
>300
Cities Sales in 2018 (units) YOY growth
Guangdong 1.77 million 21.5%
Zhejiang 1.24 million 12.0%
Shandong 1.02 million 9.0%
Sichuan 1.02 million 16.0%
Jiangsu 0.99 million 20.6%
Henan 0.95 million 14.0%
Source: Data revealed by China Automobile Dealers Association

ALL RIGHTS RESERVED
The main purchase channels of second-hand vehicles
 Offline channels still dominate the second-hand vehicle sales in China, however online platforms are
becoming more important (up 1% YOY growth).
 18-35 years olds are the main consumers of online second-hand car platforms (B2B, B2C and C2C).
61
Second-hand vehicle
stores (offline)
Friends
4S stores
Private car dealers
37.4%
23.6%
12.4%
14.8%
Online platforms
(B2B, B2C and C2C)
12.0%
Source: 2018 used car market analysis report
http://baijiahao.baidu.com/s?id=1604948169408737523&wfr=spider&for=pc
32%
36%
20%
12%
Online second-hand car sales by different age groups
(2018)
18-25 years old
25-35 years old
36-45 years old
45-60 years old
The main purchase channels of second-hand vehicles in
China (2018)

ALL RIGHTS RESERVED
Factors driving the popularity of China’s second-hand car market
• As consumers prioritize value for money, they become more price conscious and
lose confidence with spending.
Declining consumer Confidence
• Using e-commerce platforms such as Guazi (瓜子) and Uxin (优信) to connect
individuals to online sellers, China’s second-hand car market has grown in
popularity with the platforms exceeding the demand for used car dealers
Fast developing e-commerce platforms
• Online marketplaces for second-hand cars allow customers to find the best price
quickly without having to visit multiple brick and mortar shops.
More transparency and convenience
• In 2017, China lifted bans on cross provincial second-hand car sales allowing
customers in less developed regions to have more variety of models.
Lifting of bans on cross provincial second-hand car sales
62

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C2C second-hand car trading platforms
63Source: Pitchbook; Official website of Renrenche and Guazi,
https://pitchbook.com/profiles/company/107435-80
Renrenche Guazi
Renrenche (人人车) and Guazi (瓜子) are Chinese e-commerce companies that provide consumer-
to-consumer services via its web portal for buying and selling used cars.
Featured services provided
vs
Car
inspections
259 comprehensive car inspections provided by
professional assessors
249 professional car inspections help to
avoid cars with quality problems
After-sale
services
Accept return/refund within 14 days and
provide 1-year quality guarantee
Accept return/refund within 30 days and provide
after-sale guarantee within 2w kilometers in 1 year
Car selling process on Renrenche and Guazi
1
Online reservation
Free door-to door test
2 Online selling
Buyer consulting and
reservation on viewing
3
Car viewing
Average 7-days
transactions
4
Transfer the ownership
One-step service

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B2B/B2C second-hand car trading platform—Uxin (优信)
64Source: Uxin official website
Featured Brands
Service guarantee
All cars have the following requirements :
Nationwide
warranty
315 item
check
Online signing
15 Large
system
warranty
No major
accident
damage
30 days
Return and
refund
1 year or
20,000 km
warranty
Models
With the app, sign electronic
contracts for convenience,
efficiency.
SUV Sports car Pickup
Van MPV Compact car

ALL RIGHTS RESERVED
65
Distribution & Promotion
65

ALL RIGHTS RESERVED
66
Vehicles distribution channels in China (1/2)
 For a few years now, China has seen the emergence of auto supermarkets (汽车超市), very practical for consumers
who no longer need to visit tens of 4s stores (4S 店, sale + spare part + service + survey) but who still want to see
the product before buying.
 Auto supermarkets seem therefore to be good middle ground between single offline stores and online shops.
Distribution channels
Offline Online
Single and multi
brands 4S stores
Secondary
dealers
Auto
supermarket
Self-operated
e-commerce
The third party e-
commerce platforms

ALL RIGHTS RESERVED
67
Vehicles distribution channels in China (2/2)
4S stores still dominate the vehicle distribution channels in China
67
87%
6%
3%
2%
2%
Chinese people’s preferred channels of purchasing vehicles
(2018)
4S stores
Online platforms/e-
commerce
Secondary distributors
Auto supermarket
Others
Source: White paper of 2019 vehicle distributors , by Acqiche and Auto Gasgoo
http://www.sinotf.com/internetfinance/carfinance/2019-02-14/0MMDAwMDMzMDM0MQ.html
Auto e-commerce includes brands self-operated
platforms, third party e-commerce and vertical
websites. Young generations (post-90s and
younger) are willing to buy cars through online
platforms
4S stores are still the most popular distribution
channels for the vehicle brands in China.
Consumers choose 4S stores as they provide all-
in-one service (sales and after sales). Middle-
and high-income (around 10k RMB per month)
group is the main clients of China’s 4S stores.
Auto e-commerce
4S stores

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68
4S stores in China (1/3)
68
10.0%
10.0%
20.0%
20.0%
40.0%
Auto decoration
Auto parts sales
Vehicle repairs
Vehicle sales
Vechicle
maintenance
Profit sources of China’s 4s stores
(2018)
There are more than 28,000 4s stores in China. They have dominated
the offline purchase channels in tier-1, tier-2 and tier-3 cities, now
they are expanding to tier-4, tier-5 cities and rural areas.
4S=sale + spare part + service + survey. 4S stores cover all business
related to vehicles, such as sales (new cars and second-hand cars),
maintenance, car wash, auto finance, car rental and etc.
In China, vehicle sales are 4S stores’ way of attracting consumers,
they mainly profit from vehicle services (maintenance and repairs).
The competition among 4S stores primarily around price, discount
activities, test-drive services, insurance and etc.
Source: http://info.qipei.hc360.com/2018/07/170929793554.shtml
Current development

ALL RIGHTS RESERVED
69
69
Strengths and Weakness
StrengthsWeakness
Quality assurance
Vehicles and auto parts sold in 4S stores generally have good
quality, since they are directly from manufacturer.
Professional services and knowledge about cars
4S stores can provide integrated after-sale services and info
based on clients’ requests, such as vehicle parameters.
High-end images and considerable reputation
4S stores usually have good reputation and high-end images
that make them reliable for consumers.
High price
The high operation costs of 4S stores produce very
expensive cars and services.
Simple vehicle models
Most 4S stores don’t show many different vehicle
models for the same brand, sometimes consumers
can’t find their favorite models.
Hard to remaining clients
Due to the fierce competition and high price, it is
difficult for 4S stores to have repeat customers.

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70
4S stores are becoming more popular in lower tier cities
Young generations and high-income women are potential consumers of 4S stores
70Source: 2018 4S stores visitors report
http://info.qipei.hc360.com/2018/07/170929793554.shtml
In 2017, around 47% of 4S stores’ visitors
were from Tier-3, Tier-4 and Tier-5 cities.
Which indicated lower tier cities have more
and more potential auto consumers.
Many visitors are from
lower tier cities
In 2018, about 33.1% of 4S stores’ visitors
are female, which means more Chinese
women are willing to buy cars
More female visitors
Generation Z (people who were born
between 1995 and 2000) are becoming
essential auto consumers. In 2017, 27% of
4S stores’ visitors were between 16-25
years old.
Generation Z in China
In 2017, around 43% visitors of 4S stores
were from coastal provinces (such as
Guangdong, Jiangsu and Zhejiang). 20% of
visitors were from developed inland
provinces (such as Henan and Sichuan).
Coastal areas and a
few inland places

ALL RIGHTS RESERVED
71
Promotion channels to leverage for international brands
Websites and social media are dominating the promotion channels for vehicle brands
71
48%
26%
10%
8%
8%
The main channels to obtain info about vehicles in China
(2018)
Websites (including PC and
mobile)
Info from friends
WeChat
Weibo
Others
Source: White paper of 2019 vehicle distributors , by Acqiche and Auto Gasgoo
http://www.sinotf.com/internetfinance/carfinance/2019-02-14/0MMDAwMDMzMDM0MQ.html
https://www.sohu.com/a/270693744_204078
Young auto enthusiasts (post-90s and younger)
are more willing to share content about vehicles
with others. Many of them read content related
to vehicles for social purposes.
Young readers
Half of auto enthusiasts spend 5-15 minutes on
every online post (website and social media)
about vehicles. Most of them prefer content
with pictures and short videos.
Short content
Almost half of consumers obtain information
about cars from automotive websites, since
those websites usually have comprehensive
information about car brands and models.
Websites

ALL RIGHTS RESERVED
72
Offline promotion channels
Exhibitions, events and shows: the entertainment marketing strategy
72
Famous automative shows in China
 Auto Shanghai, The Shanghai Motor Show has made
its mark among international shows. Every two years it
hosts more than 900,000 visitors from 18 countries.
Next exhibition is: April 23 - 28, 2019
 Auto China (Beijing International Automotive
Exhibition) is also one of the most famous automative
shows in the world.
 Auto Guangzhou, last edition (16th) attracted an
audience of 690,000 visitors and exhibited 1,085 vehicles.
Sources: tradefest.io , autoguangzhou.com
There are more and more events and exibitions in China that attract millions of people each year.
Despite their international scope, the domestic players are most active at these shows with more than
70% of new products produced by Chinese manufacturers.
Photos credits: auto-shanghai.com
Auto Shanghai – 2018 edition

ALL RIGHTS RESERVED
74
Websites and apps to leverage for international brands
With its online service layout, automotive E-commerce platforms have obvious marketing advantages. They have gradually
become the leader in automotive eco-marketing. Automotive E-commerce represented by Youxin, Emao and Taobao make full
use of the business sector (new cars, used cars and auto finance). They are user-centric, E-commerce data-based, product and
service innovation-oriented, aiming at creating a full life cycle Eco-marketing platform.
14.1%
16.4%
21.6%
30.6%
48.1%
58.9%
Automotive tool APP
Search Engine
Automotive sector of vertical websites
Official Website
B2B/B2C platforms
Automotive vertical websites
Online channels of obtaining information regards automotive companies
Source: China Automotive E-commerce Industry User White Paper - China Automotive E-commerce Marketing Value Insight Report, 2018

ALL RIGHTS RESERVED
75
Promotion channels-examples
Automotive Vertical Websites —— Autohome (汽车之家)
Autohome Inc. was founded in 2006. It is the leading online
destination for automobile consumers in China. The mission
of Autohome is to engage, educate and inform auto
consumers in China with everything they need to know about
buying, using and selling cars.
Automakers typically utilize Autohome’s advertising
services for brand promotion, new model releases
and sales promotions.
Advertising
Allow dealers to market their inventory and services
through Autohome website, extending the reach of
their physical showrooms to potentially millions of
internet users in China.
Subscription
Autohome organizes various types of offline national or local events for international automotive
brands, such as online marketing campaigns and user forum. Through dealer application interface,
dealers can create their online showrooms hosted on Autohome websites and upload their
automobile inventories, pricing and promotional information.
Promotion strategies
01 Backstage Maintenance
02 Brand Communication
The large and growing automobile purchase- and ownership-oriented user base of Autohome
provides a broad reach for automakers' marketing messages. Its technologies segments user
base in a number of different dimensions, including by users' geographical location and specific
automotive interests.
Source: https://www.autohome.com.cn/about/index.html#pvareaid=21256822770
‘The study about the new media communication of Volvo brand’, 2018

ALL RIGHTS RESERVED
77
B2B/B2C Platforms —— Taoche (淘车)
Taoche is an online car trading platform built by Yixin Group. The platform
provides users with one-stop car trading services covering new cars, used
cars and car value-added services. Taoche obtains strong potentials in
automotive B2B fields with cooperation with Bitaoto, Jindong, etc.
Promotion strategies
Business Model Layout of Taoche Provide vehicle transactions,
loans, value-added services,
advertising and membership
services for manufacturers,
dealers financing and insurance
companies.
Tencent
Baidu
Bitaoto
Jindong
Yixin Group
+
Taoche
1
Financial leases and operating
leases to provide customers
with automotive financing
solutions.
2
New Car
Used car
Installment
Insurance
Experience Store
Financial services
Platform services
Investors Business UnitBusiness Model
01 Advertisements and membership
03 Addressing the needs of young customers
For international brands, Taoche follows the trend
of car consumption rejuvenation, practicing E-
commerce marketing model of driving sales with
financial product innovation, such as the ‚Going
away‛ initiative.
Source:
https://shanghai.taoche.com/all/
China Automotive E-commerce Industry User White Paper - China Automotive
E-commerce Marketing Value Insight Report, 2018

ALL RIGHTS RESERVED
79
Automotive Magazines
Auto Magazine Auto Fan
Auto Magazine is a leader in China's automotive information
communication field and a flag of China's advanced automobile
consumption culture. Constant innovation and continuous revision
have enabled the magazine to gain a steady stream of power and
vitality.
Auto Fan premier on-line auto magazine, breaking news,
videos and useful vehicle information such as specs, crash
tests, future vehicles and technology.
Source: https://baijiahao.baidu.com/s?id=1606468407503753493&wfr=spider&for=pc
http://www.autofan.com.cn/

ALL RIGHTS RESERVED
81
KOLs landscape
For many vehicle brands, KOLs are one of the most important channels to promote their cars in China.
More than 70% vehicle consumers follow at least 3 KOLs, their purchasing behaviors are highly influenced by
KOLs’ opinions and experience
81
7.0%
17.2%
46.5%
12.8%
16.6%
More than 10 6-9 KOLs 3-5 KOLs 1-2 KOLs Never followed
KOLs
Chinese vehicle consumers follow auto KOLs
(2018)
70.7%
Source: 2018 auto content industry report
https://www.sohu.com/a/270693744_204078
Important recommendations about cars for Chinese vehicle
consumers
Recommendations
from friends
Recommendations
from auto KOLs
Recommendations
from other KOLs
Recommendations
from celebrities
51.8%
29.8%
18.2%
11.4%
Opinions from
friends are very
important for
Chinese vehicle
buyers

Auto KOLs usually
have stronger
influence on vehicle
consumers than
other KOLs and
celebrities.

ALL RIGHTS RESERVED
82
Auto KOLs and their contents-Weibo
82
Automotive testing video
546 CommentsTesting video
on BMW M850i
387 Forwards 2399 Likes
New car photos
Q&A
546 Comments
Recommended automotive type
(Mercedes-Benz A35) with
attractive images and impressive
descriptions
Questions: New car versus Used car
Read by 761 people.
Questions: New car recommendations
Read by 2671 people.
@陈震同学
3.96 million followers
Profile:
Racing driver,
Weibo-signed ‘We
Media’
@PS3保罗
3.33 million followers
Profile:
Weibo-signed ‘We
Media’
Automotive testing video
96 CommentsPorsche Taycan
testing video
New car photos
12.2 W Views105 W Views
223 Comments
Attractive and impressive
automotive images on Hongqi
N501
Examples and statistics are from Weibo homepages of @陈震同学 and @PS3保罗.

ALL RIGHTS RESERVED
83
Auto KOLs and their contents-WeChat
83
Automotive brands introduction
For now, SaiLei has described 52
brand stories regards famous
automotive.
Automotive evaluation
@赛雷
392 original articles
Profile:
Famous Automotive
KOL WeChat
Account
@懂车
399 original articles
Profile:
Automotive Sales information
Automotive Monthly Sales Ranking
for small car, SUV, and MPV.
Automotive evaluation
9 K+ Views
9.6 W Views
Deep Car Test for
small car, SUV,
and MPV.
e.g. WEY VV7
 Design
 Function
 Price
10 W+ Views
SaiLei has conducted testing
and evaluation for different
vehicles classified by
Japan/Korea, America, China
and Europe.
e.g. Aston Martin:
 Band history
 Market share
 Value proposition
 Attractive images and
language
Famous Automotive
WeChat Official
Account
352 Views
e.g. Lincoln MKX:
 Design
 Function
 Price
Examples and statistics are from WeChat official accounts of @赛雷 and @懂车.

ALL RIGHTS RESERVED
84
Auto KOLs and their content-Xiaohongshu
Video of automotive tutorials
@大师说车
3.8 W followers
Profile:
Automotive experts
@BiBi CAR
1.7 W followers
Profile:
Automotive
promotion KOL
Photos of luxury cars
90 Comments
How to use car lights correctly
2657 Favorites
1639 Likes
5.9 W likes 2.4 W likes
203 Comments
What to do when your key
battery runs out
2694 Favorites
2710 Likes
31 Comments
Koenigsegg Jesko
67 Favorites
199 Likes
22 Comments
Lamborghini
29 Favorites
71 Likes
Examples and statistics are from Xiaohongshu homepages of @大师说车 and @BiBi CAR.

ALL RIGHTS RESERVED
NEW ENERGY VEHICLES
85

ALL RIGHTS RESERVED
Sales of new energy vehicles (NEV) in China
In 2018, the sales of new energy vehicles were mostly from passenger vehicles and battery electric
vehicles.
88
0
20
40
60
80
100
120
140
160 Hybrid vs. Electric Vehicle Sales in China
(thousands)
Pure Electric Hybrid
2016 total = 510,000
2017 total = 770,000
2018 total = 1,250,000
Market segments
Sales in 2018
(units)
YOY growth
New energy passenger
vehicles
1,050,000 82%
Battery electric vehicle
(BEV)
788,000 68%
Plug-in hybrid electric
vehicle (PHEV)
256,000 139.6%
New energy commercial
vehicles
203,000 2.6%
Battery electric vehicle
(BEV)
196,000 6.3%
Plug-in hybrid electric
vehicle (PHEV)
6,000 58%
Source: https://baijiahao.baidu.com/s?id=1623418123664675759&wfr

ALL RIGHTS RESERVED
Why is China’s new energy vehicle market growing?
Government support is a major factor behind new energy vehicles growth in China
20% of auto
market to be
new energy by
2025
Subsidies for
EVs purchases
Reduce
dependence on
imported oil
90
Clear the
smoggy skies
Become an
automotive
superpower
Cap & trade
regime
Incentives for
government
support
Government
incentives on
consumers
Government
incentives on
carmakers
Government
goals*
Special
manufacturing
permits
2 million
annual sales by
2020
*According to the Ministry of Industry and
Information Technology of the People’s Republic of
China
Domestic
brands control
70% of EV
market by 2020
License plate
lottery
exemption

ALL RIGHTS RESERVED
The Chinese government’s incentives for consumers
91
Subsidies for
NEV purchases
License plate
lottery
exemption
Up to 50,000RMB in 2018 for vehicles with
charge ranges over 400KM, although subsidies for vehicles with low
charge/driving ranges has lowered
The exemptions from the license plate lottery and registration fee are
critical to make purchasing an NEV more attractive for younger, first-time
car buyers.
Cap & trade
regime
Special
manufacturing
permits
A government equation requires a certain amount of production or imports
must be green in 2019, resembling the cap-and-trade for carbon emissions.
Carmakers can purchase credits from rivals that exceed it
The government started issuing special manufacturing permits to
companies outside traditional auto industry players in China, allowing
dozens of startups to emerge
The Chinese government’s incentives for carmakers

ALL RIGHTS RESERVED
Subsidies policy for China’s new energy vehicle market
China’s subsidies policy for new energy vehicles in 2019
92
Vehicle types
Driving ranges
(km)
Government
subsidies in 2019
(RMB)
YOY growth
BEV
R<250 0 -100%
250≤R<400 18,000 -60%
R≥400 25,000 -50%
PHEV ---- 10,000 -54.5%
Source: http://news.bitauto.com/hao/wenzhang/1184275
2019 subsidies policy supports NEV
with higher technologies
 No subsidies for new energy vehicles
with driving ranges lower than 250
km.
 Decreases the subsidies for new
energy vehicles with driving ranges
higher than 250km (include 250 km).
 Encourages local manufacturers to
rely on innovation rather than
government assistance

ALL RIGHTS RESERVED
NEV manufacturing cap & trade policy
93
A carmaker needs 10% of
their produced amount
in Credits
Each NEV is worth 2-6 credits
depending on how far the
vehicle’s charge efficiency
A company who makes 100,000 cars
needs to earn 10,000 credits
These credits can be earned by
manufacturing 5,000 low charge capacity
NEV
If the company doesn’t reach 10,000
credits, it can buy credits
These credits can be earned by
manufacturing 1,666 of the highest quality
NEV
If the company does not reach the
credit quota, they are penalized
If the company has excess credits it
can sell to other manufacturers
The manufacturers making the most efficient
NEV become more profitable

ALL RIGHTS RESERVED
Profile of new energy vehicles buyers in China
94
 Most new energy vehicles buyers in
China are the first person in their
family to ever own a car
 Mostly urban: 40% of China’s electric
car sales in 2018 came from 6 large
Chinese cities:
Sources: Bloomberg ; 2018 study from sustainibility and MDPI
 The young generations most
aware of the environmental
issues
 Upper-middle class Chinese also
increasing
People who have had money for enough time to buy
the things they want and are now focused on
reinventing their lifestyles.
 Mostly highly educated: 25% of
potential NEV purchasers hold at
least a master’s degree
Photos credits: flaticon
Beijing, Shanghai, Shenzhen, Tianjin, Hangzhou and
Guangzhou because of the awareness of the pollution
problems inherent to combustion vehicles and the
gasoline-car restrictions that have been implemented
in these cities.

ALL RIGHTS RESERVED
95
BYD in China
 2003: Shenzhen’s BYD started building
vehicles in China (initially a battery
manufacturer)
 2008: The billionaire investor Warren
Buffett announced he was putting $230
million into China’s BYD
 2011: the company introduced its first
all-electric car E6
 2018: BYD is China’s top-selling electric
vehicle maker
China-based automaker BYD Company Limited (BYD) sold a total
of 520,687 vehicles in 2018 including 247,811 electric
vehicles, achieving a year-on-year jump of 25%.
520,687
0
100,000
200,000
300,000
400,000
500,000
600,000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
BYD evolution in sales from over the past decade
Sources: Quartz ; AutoGasgoo.com
China's biggest electric vehicle maker: BYD

ALL RIGHTS RESERVED
BYD establishment in China
96Sources: The icct, Reuters
World's biggest battery
factory
The latest BYD lithium battery
plant, opened last year in the
northwestern province of
Qinghai is able to produce 24
gigawatt-hours of batteries a
year, and is part of the
company’s plans to raise its
total production capacity to 60
GWh by 2020.

ALL RIGHTS RESERVED
97Sources: Quartz ; China’s online news portal Sina
Vehicle models Units sold in
China 2018
Average price
Song 91,426 $28 000
Tang 62.078 $40 000
Yuan 41,861 $25,000
Qin 7,851 $32 000
Top selling BYD EV models in China in 2018
Song EV300: main features
 The iconic ‘Dragon face’
 Compact, 5-door station wagon
 Battery: NEDC range of 270 kilometers and a 60 km/h
range of 300 kilometers running on a 48 kWh battery
pack
 Engines: 218 hp electric motor
Photos credits: BYD
BYD car models in China
In 2018, BYD launched new generations of the BYD Tang,
Yuan EV, Song and the Qin

ALL RIGHTS RESERVED
BYD marketing strategy for the Chinese market (1/2)
‘Beyond your dreams’: bringing EV to the masses
98
Advantageous pricing strategy
BYD, thanks to its various plants in China has the
competitive advantage to integrate all of the key
compenents in-house.
Also, with the help of subsidies, BYD has been able to
build economies of scale, pushing down their cost per
unit and allowing them to spend more on research and
development.
Flexibility to reach a wider audience
BYD decided to go on all-in on hybrid rather than pure
electric with one of its model, ‘Qin’. It is a more flexible
option for consumers, who can drive it as an electric car
for daily commute and reach much father distance
without having to worry about charging.
It’s allow the brand to reach all types of customers,
even some skeptics, with a wide range of products.
I only considered BYD and BAIC. I definitely can’t afford
the 300,000-600,000 yuan price of a luxury-style Tesla
- Qu Lijian, a 31-year-old government worker in Beijing
Sources: fortune.com ; byd.com
“
BYD Qin electric model
Photos credits: BYD

ALL RIGHTS RESERVED
99
3
Green
Dreams Affordable solar power
high efficiency, excellent Optical
Performance (power even under less-
than-optimal condition), easiness in
Being Storage
Battery storage
Efficient and eco-friendly new system with PV
+ storage : discharge during the high power
demand, charge during the low power
demand.
Electric transportation: Green
city solution
Given today’s ubiquitous traffic
congestion, BYD believes the solution
lies in EV and 3D traffic networks that
combine underground, ground, and air
transport: the SkyRail project.
‘‘Three Green Dreams’’ strategy
BYD marketing strategy for the Chinese market (2/2)
Photos credits: BYD

ALL RIGHTS RESERVED
FUTURE OF MOBLITY
108

ALL RIGHTS RESERVED
109
The shared economy for cars is developing fast (1/2)
2. RIDE SHARING IS PART OF DAILY LIFE
1. CAR OWNERSHIP IS QUITE RARE
China has only 1 private car for every 7 people
by the end of 2018 (189 million registered
private cars)
USA: 1 car per
1,25 people
Europe: 1 car per
2 people
In 2018, 150 million Chinese
people had driver’s licenses but
haven’t owned private cars
Sources: Roland Berger, Ministry of Public Security
http://www.199it.com/archives/824125.html
10% of the Chinese vehicle fleet is
shared in the form of taxis, rental cars,
ride hailing, etc. Compared to 1% in
the West.
Taxi rides in Beijing and Shanghai cost
about half they do in NY
China is the leading country both in terms of car sharing and bicycle sharing

ALL RIGHTS RESERVED
110
Today China is the largest ride-hailing market in the world, with a value of US$30 billion
The shared economy for cars is developing fast (2/2)
Vast potential for car sharing business through both organic growth and conversion from other mobility
segments
Sources: askci.com 2018 report ; Arthur D Litlle
In 2018 Shanghai was China's
leading city in terms of
number of users, followed by
Chongqing, Chengdu,
Guangzhou and Beijing
0.45
0.86
2.41
5.47
9.34
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
2016 2017 2018 2019 2020
Size of the car-sharing market in China 2016 -
2020 (billion RMB)

ALL RIGHTS RESERVED
The majority of users of these services in China are men aged 24 to 40. There are therefore great
opportunities to try to attract young people (under 24 years old) who represent 10% of regular users
111
Who are the main users?
36%
64%
Users of car-sharing services in China
by gender (2018)
Female Male
9.7%
26.6%
26.9%
27.7%
9.1%
Users of car-sharing services in China
by ages (2018)
<24 24-30 31-35 36-40 >41
Sources: askci.com 2018 report

ALL RIGHTS RESERVED
Mobility platforms aim to transform the future of mobility in China
112Sources: Consullting firm Bain & Company ; Reuters ; Beijing Morning
Post ; en.people.cn ; Roland Berger
These two applications are the major players in the ride-sharing marketing in China in 2018
DiDi is a Chinese transportation network
company headquartered in Beijing which
provides taxi hailing services to users in China
via a smartphone app.
In 2018, Didi holds more than 80% of China’s
ride-sharing market
Mobike is a fully station-less bicycle-sharing
system headquartered in Beijing and
originally financed by Tencent.
In 2018, Mobike had nearly 200 million
registered users

ALL RIGHTS RESERVED
113
DiDi Chuxing: China’s ride-hailing giant (1/2)
 DiDi China outperforms Uber World both in terms of coverage and rides.
 Didi even bought Uber’s China operations in 2016 after its failure in the Chinese market
30
15
0 5 10 15 20 25 30 35
DiDi China
Uber World
Rides per day in 2018 (millions)
632
400
0 100 200 300 400 500 600 700
DiDi China
Uber World
Number of cities covered in 2017
15
5
0
2
4
6
8
10
12
14
16
DiDi China Uber World
Total cumulated rides
(billion- since their to 2018)
Sources: Roland Berger

ALL RIGHTS RESERVED
DiDi’s marketing strategy is to go global and to invest in NEV
114
DiDi Chuxing: China’s ride-hailing giant (2/2)
"Going global is a top strategic priority for Didi"
Cheng Wei, founder and CEO
Since a few months, DiDi is rolling out its services in Latin America,
Australia and Japan, in a bid to become the world's leading mobile
transportation player
Last year, Didi teamed up with new
energy car maker BAIC to form a joint
venture to work on electric vehicles.
Today about 400,000 NE vehicles have
registered with Didi's services.
x
Sources: China Daily ; Didi.com

ALL RIGHTS RESERVED
Mobike, the Chinese bike-sharing app available in 200 cities worldwide (1/2)
Mobikers in China have traveled 2.5 billion kilometers in 2017
115
An eco-friendly communication strategy
• Mobike Life Cycle program, to reduce, reuse and
recycle bike components
• E-Bike Development
• Has been named ‚Earth Guardian‛ and ‚Climate
Runner‛ by the United Nations and WWF respectively.
 More than 70% of Mobike
users are between 20 and
40
 Male users take more
trips than female users
 1 out of 3 users cycle for
leisure and exercice
Sources: Mobike.com ; Asia fitness today Photos credits: mobike.com

ALL RIGHTS RESERVED
Mobike wants to expand into the short-term car-rental market
116
Mobike, the Chinese bike-sharing app available in 200 cities worldwide (2/2)
A strategic partnership with Gui’an New Area
(in Guiyang city)
Mobike will work with this local electric car
company, to launch a fleet of shared NEV
automobiles
Sources: Chinadaily.com Photos credits: yicaiglobal.com ; Mobike
Mobike New Energy Vehicles in Guizhou Province - 2018
New Mobike app
Users are able to unlock,
park, lock and make
payments in the same app
they use to rent shared
bikes via the newly added
car-rental feature.

ALL RIGHTS RESERVED
117
For a few years now, Chinese consumers are more difficult to please in terms of connectivity services, they are
seeking for innovative in-car services and are even ready to pay subsciptions for content. Now automakers and
tech giants are all racing peers to new tech horizons!
Connected cars
A connected car is a vehicle
connected to the Internet
through its communication
system. It allows the driver to
connect a smartphone to the
car, but also the car itself to
connect to the surrounding cars
and infrastructure. Passengers
can therefore benefit from
extensive services, including
applications.
Photo credits: SCMP Pictures
The global
connected-car
market is expected
to grow 270% by
2022
SAIC's internet-connected car, the Roewe RX5 SUV
Sources: Accenture China ; Research And Markets
High-connectivity, a must have feature for carmakers in China (1/3)

ALL RIGHTS RESERVED
118
79%
65%
52%
32%
53%
40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Plan to buy a connected car in the future Accept connected car technologies
Connected cars among Chinese drivers
(2018)
China North America Europe
Source: Kantar TNS 2018
Today, 80% of your
smartphone’s functions are not
relevant to making phone calls
or conversation.
I believe that in the future, a
car will have 80% of its
functions not related to just
transportation.
- Alibaba Chairman Jack Ma
“

ALL RIGHTS RESERVED
A growing demand of Chinese customers for greater connectivity in cars
119
41 million people in China will make use of in-car
connectivity by 2021
30 % of consumers regard connectivity as one of the top 5
considerations when buying a new car
The Connected Car penetration is 6.6% in 2019 and is
expected to hit 17.9% by 2023
Sources: Accenture China ; Research And Markets

ALL RIGHTS RESERVED
120
 Multi screens: 4 to 6 inch LCD screens in particular
 HUD: Head up display is a technology that displays transparent
data in the field of view, such as speed or GPS information
 Multiplication of sensors and chips for ADAS (Advanced Driver
Assistance Systems): dozens of sensors are preset as hardware for
upgrading ADAS and automated driving functions
 Smart speakers adapted to driving
 Car systems (Car play by Apple, Android Auto by Google, Baidu
Car Life by Baidu) that allow drivers to make phone calls, listen to
music online and online maps
Photos credits: 1# dhgate.com 2# Technode
Types of in-car connectivity services in China

ALL RIGHTS RESERVED
121
Alibaba Group’s smart assistant, Tmall Genie, will launch in select vehicles from the BMW Group in China by the
end of the year.
Tmall Genie, an A.I. Labs manufactured product, will
be fully integrated into BMW vehicles, offering drivers
a number of entertainment and shopping options in
the car. Drivers can use Tmall Genie to:
♦ Buy online
♦ Watch movies
♦ Listen to music
♦ Check the weather
♦ Call appointments registered in BMW Connected
Photos credits: BMW official blog
x
Integration of Alibaba’s Tmall Genie in BMW vehicles

ALL RIGHTS RESERVED
NEW RETAIL
122

ALL RIGHTS RESERVED
New retail in the automotive industry
Demands of
consumers
R&D
Production
logistics
Marketing
&
Sales
123
Data Data
Data Data
R&D
Manufacturing
logistics
Marketing &
Sales
Consumers
Traditional retail in automotive market New retail in automotive market
In traditional vehicle retail
market, consumers are at
the end of the chain links.
Manufacturers and car
brands can’t directly
receive feeback from
clients.
Consumers usually have
three issues during their
purchasing:
• Unsatisfied with vehicle
models
• The lack of flexible
configuration
• Slow pace of
developing new arrivals
The new retail in
automotive market is
more consumer-centric.
By collecting
consumers’ data (such
as interests, price and
design preferences),
vehicle brands are able
to provide cars, auto
configuration and
services based on
consumers’ requests.
Consumers can buy
vehicles through both
offline and online
channels, such as
mobile apps.

ALL RIGHTS RESERVED
New Retail transforms the car buyer journey in China
The consumer's journey is shorter because the touchpoints are blended: for example Wechat
content is now a touchpoint for each step of the car buyer journey in China.
124
Research Purchase Receive Post-Purchase
New Retail allows the Chinese car buyer journey to become shorter: 5 months’ time could
become 3 months (estimate)
Photos credits: flaticonSources: pmpov.com
CLASSIC
NEW
RETAIL
Research Purchase Receive Post-Purchase

ALL RIGHTS RESERVED
New retail in the automotive industry-examples (1/6)
125
Alibaba and Ford allow Chinese people to buy a car from a staff-less machine in under 10 minutes
Chinese giant Alibaba wants to revolutionize the car
buying experience in China: the customer
experience will be fast and easy. In partnership with
Ford, they launched an auto vending machine, the
Super Test-Drive Center in Guangzhou.
Customers go to the Tmall app and choose
the model they want to test drive via the
online catalogue
To register, customers must take a picture of
their face
Once in store, the customer just has to show
their face to facial recognition, the car chosen
online arrives from the multistory structure
Then the customer can test the car for a few
days (3 days max) and order it online
The process is simple:
1
2
3
4
Photos credits: Tech Crunch

ALL RIGHTS RESERVED
126
Leading car manufacturers are now trying to focus on online channels
Renault recently announced a
partnership with Alibaba
to sell its cars online as a key
part of Renault’s ‘In China, For
China’ strategy
Photos credits: Daxue consulting Sources:e-consultancy, adweek.com
Uxin and Taobao jointly established
an online used car shopping
mall on Taobao to expand
service opportunities for used car e-
commerce in China
In 2018, during Single’s Day, Buick,
the US auto manufacturer sold
over 7000 vehicles online and
Land Rover sold 90 vehicles

ALL RIGHTS RESERVED
SAIC MAXUS (a Chinese auto company) launched a C2B platform for the personalized customization of
vehicles
127Sources: http://www.sohu.com/a/228650110_121861
The platform provides all-round design options for
every buyer. Including 4 aspects: basic configuration
(such as gearbox), appearance, interiors and auto
equipment (such as a spare wheel).
The platform also can recommend popular vehicle
models that meet consumers’ requirements after
they chose 9 most important auto configurations.
C2B large-scale
customization

ALL RIGHTS RESERVED
‚Internet+ Leasing‛ has been popularized in Automotive New Retailing.
128
As a financial service solution of Dasouche based on the Antfin
platform, Tangeche has detonated the concept of ‚Auto New
Retailing‛ and provided customers with new a car purchasing
experience.
• Low down payment
10%-20% ultra-low down payment, including purchase tax and
one-year insurance.
• Flexible options
After one-year usage, customers have three options: continue to
use, purchase, or refund.
• Elastic 4-year installment(1+3 mode)
After leasing for the first year, customers could pay in lump-sum
payment or 3-year installment.
• 15 minutes ultra-fast approval
Four core Unique Selling Propositions
Down
payment
2w RMB
Take the car of
about 20w RMB
as example
First-year usage
CN¥2,098/month
Flexible
purchasing
options
Source:Internet direct rent has detonated automotive new retailing, DAO OF FINANCE
http://finance.ifeng.com/a/20171204/15840676_0.shtml

ALL RIGHTS RESERVED
Maihaoche has established the ‘Information + Warehousing + Logistics + Finance’ New Retailing.
129
Maohaoche is committed to provide one-stop solutions to car sources, costs and turnover for automotive dealers.
This is also a new mode of retailing in the form of “car information, car logistics, car warehousing, and auto
finance” to help auto dealers to improve their operating efficiency, profit margin, and reduce their operating costs.
Information Logistics Warehousing Finance
Response in
15
minutes
30 billion
transaction
turnover
Cover
300+
cities nationwide
Cover more than
96%
prefecture-level
cities
Source: http://www.itbear.com.cn/html/2017-09/239617.html
https://b.maihaoche.com/n/static/index.htm

ALL RIGHTS RESERVED
‘’BYTON places’’ are opening in China, the first in January 2019 in Shanghai
It combines a full suite of online channels with offline
channels including BYTON Places, Full Function BYTON
Places, and BYTON Service Centers. BYTON Places will
provide a comprehensive range of services including pre-
sales, sales, delivery, and after-sales.
Unlike traditional retail stores that focus on product display and
sales, BYTON Place is designed to connect customers to the
BYTON lifestyle. Customers can immerse themselves in AR, VR
and Shared experience display simulators.
Sources: insideevs.com, byton.com Photos credits: byton.com
Shared experience display – BYTON Place, Shanghai
AR Table – BYTON Place, Shanghai

ALL RIGHTS RESERVED
History of the auto finance market in China
132
1995-1998 2004 2014 2015 2017-2018
SAIC-GM (上汽通用) was a
pioneer built an auto
financing company in China,
since then more similar
institutions have been
created.
The third party auto financing
platforms started to rise. Such
as Zuihuibao (最惠保), a O2O
auto financing platform.
Zhongan (众安) became the first
internet company that received
auto insurance permit from
China’s government. After that,
online auto insurance was officially
admitted by the government.
The People's Bank Of China and
CBRC announced the maximum
rate of auto loans is 80% (of the
vehicle’s price) for fuel vehicles,
85% for new energy vehicles and
70% for second-hand cars.
Some China’s banks
started to develop auto
loan services, by working
with large auto brands.

ALL RIGHTS RESERVED
Auto finance market is consistently rising in China
 Auto loans are one of the most important parts in auto finance market, its market size has been
growing for several years in China.
 Except the high sales of new vehicles, the growing second-hand vehicles market also explains why auto
finance is becoming more popular in China.
135
Source: 2018 China auto financing market report
http://www.sohu.com/a/234630620_100176866
687.7
756.5
801.5
1,000
31.5%
10.0%
5.9%
24.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
0
200
400
600
800
1000
1200
2014 2015 2016 2017
Market size of auto loans in China
(2014-2017)
Auto loans market size (billion RMB) YOY Growth

ALL RIGHTS RESERVED
China still has large potential for auto finance
 Compared to other countries, many Chinese consumers haven’t considered auto finance as a main
payment method for purchasing cars.
 Which means auto finance still has quite a large developing space in China’s market.
136
81.0%
75.0%
70.0%
39.0%
USA Germany France China
The market penetration rate of auto finance in different countries
(2017)
Source: https://bg.qianzhan.com/report/detail/459/190131-62281d6c.html ,
Forward-the Economist

ALL RIGHTS RESERVED
The main players in China’s auto finance market (1/2)
 China’s auto finance market is dominated by banks and large auto finance institutions.
 The growing new energy and second-hand vehicles are supporting the increasing of China’s auto
finance market.
137
41%
28%
31%
Market shares of the main players in China’s auto finance market
(2018)
Banks
Auto financing
companies
Other financial
institutions
Auto finance services suppliers
1. Bank organization
2. Auto finance companies
3. Online finance platforms
4. Financial leasing institutions

ALL RIGHTS RESERVED
The main players in China’s auto finance market (2/2)
People with stable
income
Medium interests, no
extra fees
Maximum 5 years
People with stable
income
Maximum 5 years
People with stable
income
High interests, no
extra fees
Can be 0%
People with strong
credit history
Low interests, extra
service fees
Around 3 years
Target consumers
Interest & Cost
Repayment period
Auto finance
companies
Online finance
platforms
Financial
leasing
institutions
Banks
138
Medium interests, no
extra fees
Minimum down
payment
Maximum 5 years
30% - 50% based on
different situations
At least 20%
15%-20% based on
different situations

ALL RIGHTS RESERVED
Who are the main consumers of auto finance (1/2)
The consumers of auto finance are mostly married with no children
139
74%
26%
Marriage status of auto finance consumers in
China (2018)
Married Unmarried
72%
9%
5%
8%
6%
Family status of auto finance consumers in China
(2018)
No children
13-17 years old children
0-3 children

ALL RIGHTS RESERVED
Who are the main consumers of auto finance (2/2)
White-collar employees with college education make up most the clientele
140
49%
16%
9%
8%
8%
3%
3%
4%
The careers of auto finance consumers in China
(2018)
White-collar employees
Service workers
College students
Self-employed people
Factory workers
Doctors
Teachers
Others
4%
30%
31%
35%
Education background of auto finance consumers in
China (2018)
Masters and beyond
Bachelor degree
Associate degree
High school and
below

ALL RIGHTS RESERVED
Internet auto finance-China’s P2P platforms
 China’s P2P finance platforms (including auto loans) are on the rise.
 In 2018, the deal size of auto loans on P2P platforms dropped dramatically, as many platforms closed
due to financial problems (couldn't repay the principal and interest of investors) and poor
management.
141
19.47
66.5
161.6
247.7
143.3
0
50
100
150
200
250
300
2014 2015 2016 2017 2018
The deal size of P2P auto loans
(billion RMB, 2014-2018)
The deal szie of P2P auto loans (billion RMB)
Source:2018 auto finance market analysis
http://www.199it.com/archives/727783.html
https://www.01caijing.com/article/35239.htm
Rank
2018
P2P Platforms
Total size of auto
loans in 2018
YOY Growth
1.
Weidai.com
(微贷网)
55.6 billion RMB -30.7%
2.
Touna.cn
(投哪网)
3.
YOOLI.com
(有利网)
7 billion RMB +8.3%
4.
RRJC.com
(人人聚财)
5.
51tuodao.com
(拓道金服)
4.5 billion RMB +11.3%
Source: https://www.01caijing.com/article/35239.htm
The top 5 P2P platforms focus on auto finance
(2018)

ALL RIGHTS RESERVED
Auto finance companies (1/2)
142
The first auto finance company in China——SAIC GMAC
1 2
3 4
Main business
Auto loans for
passenger vehicle
consumers
Auto loans for
passenger vehicle
distributors
Loans for operating
equipment (exhibit hall
and auto maintenance)
Other loans related to
automotive industry
 As the first auto finance company in China, SAIC GMAC offers auto
finance services to both passenger vehicle consumers and
distributors.
 The company has more than 5 million retail customers and built
partnership with around 7,000 auto distributors in China.
 The company launched a auto loans platform on mobile (by
scanning the QR code), it provides loans focus on 5 brands (BUICK,
Chevrolet, Cadillac, BaoJun and SGMW) and second-hand vehicles.
Source: https://www.saicgmac.com/Default.aspx

ALL RIGHTS RESERVED
Auto finance companies (2/2)
The leading online platform of auto finance services——Daikuan.com
143
 The platform provides one-stop financial services for vehicle
consumers, including most car brands and models.
 Super fast approval for clients’ online applications, the
shortest time is 10 seconds.
 Low down payments (even zero down payments based on car
models) and interest rates.
Source: https://www.daikuan.com/shanghai/
Main business
1 2
3 4
Auto loans for buying
new vehicles
Auto loans for buying
second-hand vehicles
Recommending loans
solutions and car models
based on consumers’
income and jobs
Auto insurance
services by working
with insurance
companies
Recommending car models
based on your income
Recommending loan solutions
based on your income

ALL RIGHTS RESERVED
Volkswagen in China: successful cooperation for 41 years
145
Volkswagen started its connection with China as early as in 1978 and the Volkswagen Group China
(now called SAIC Volkswagen) was founded in 1985.
Source: volkswagenag.com

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Volkswagen, the leading car maker in China
Volkswagen Group China achieves sales record in 2018
vehicles delivered by Volkswagen to customers in China including
196,300 imported vehicles
growth compared to 2017 when they delivered 4.18 million vehicles
Volkswagen car delivered to a Chinese customer marking a milestone
for the group
Source: volkswagenag.com
4.21 million
+ 0.5 %
30 millionth
146

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Volkswagen Lavida, top selling model in China in 2018
The Volkswagen Lavida is a 4-door sedan which has been sold exclusively in China since 2008.
148
504 000 units sold in China in
2018
 Between 110,000 RMB and 160,000 RMB
 3 generations
2008-2012: Lavida
2012-2018: New Lavida
2018: Lavida Plus
 Lavida's style: classic and long (the latest
generation is 4.67 metres long).
Identifiable thanks to its front grille and
its rear fascia
Photo credits: Volkswagen 2012

ALL RIGHTS RESERVED
Volkswagen marketing strategy in China (1/2)
Two profitable marketing strategies for Volkswagen
150
A well segmented offer
to reach various targets
‘First come first serve’
The large Volkswagen brand portfolio in China is an
efficient segmentation strategy that allows the brand to
address all targets and to show they are close to every
Chinese.
Because Volkswagen was the 1st foreign automaker in
China, it can now compete directly with Chinese
competitors. The brand really emphasize on this
authenticity and improves its reliable brand image.
The People’s Car Project’ China Ad Campaign (2011) Shanghai Volkswagen 30th Anniversary Ad (2015)

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Volkswagen marketing strategy in China (2/2)
Last Volkswagen advertising campaign in China: celebrating the country’s beauty
151
At the end of 2018, a Volkswagen SAIC campaign
announced the launch of three VW models: Phideon,
Teramont and Tiguan L:
The aim of this campaign is to
align SAIC Shanghai
Volkswagen's brand image
with China's powerful
economic growth. The timing
of the publication, that is the
40th anniversary of the policy
of openness and reform, is
perfect.
- Fan Ng
Creative Director of the advertising
agency Saatchi & Saatchi,
“

ALL RIGHTS RESERVED
Future projects for SAIC Volkswagen
Electric vehicles: ‘Moving people forward’ new brand mission for Volkswagen
152
Volkswagen roadmap concerning investments in electric vehicles in CHina
Heavy investments in EV
Volkswagen recently announced that it
will invest $15 billion in the
development of electric vehicles in
China over the next five years
New EV brand for Chinese
consumers
In 2018, the brand announced the
launch of the SOL brand in partnership
with the Chinese manufacturer Anhui
Jianghuai Automobile, whose first
model is an electric SUV with "more
than 300 km" range.
Source: Usine Nouvelle

ALL RIGHTS RESERVED
153
The main owners of Volkswagen vehicles in China 2018
Most of them are married men from tier-2 and tier-3 cities, white-collar employees between 25- 44 years old.
153
89.5%
10.5%
male
female
85.4% owners
are married
89.5% owners
are men
16.3%
19.5%
22.9%
37.8%
Tier-1 cities
Tier-4 cities
Tier-3 cities
Tier-2 cities
60.7% owners live in tier-2
and tier-3 cities
5.1%
65.3%
20.1%
9.5%
0.0%
20.0%
40.0%
60.0%
80.0%
under 24 25-34 35-44 above 45
85.4%
owners are
between 25-
44 years old
54%
14%
8%
8%
5%
11%
White-collar employees
Service workers
Self-employed people
Factory workers
Doctors
Others
54% owners are
white-collar workers
Source:2018-2019 China’s automotive market report

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Geely in China
‘’Making Refined Cars for Everyone’’ since 1997
154
1986 Geely group is established in China
1997 Geely enters the automative industry
in China
2010 Geely group owns the Swedish car
maker Volvo
2015 Geely announces its ambitious new
energy initiative, Blue Geely
2016 Geely Auto Group launches the brand
LYNK & CO
Sources: global.geely.com ; Asian Review

ALL RIGHTS RESERVED
Geely sales in 2018
Geely gaining momentum in auto market
155Sources: global.geely.com
61%
30%
6.40%
2.60%
Geely sales by vehicle price in 2018
Up to 100,000 RMB Between 100,000 and 150,000 RMB
Between 150,000 and 250,000 RMB Others
1,500,838 units sold in 2018, an increase of
20.3% from 2017
6.9% market share in 2018, an increase of 1.3%
from 2017
857,922 SUVs sold in 2018, accounting for 57%
of the group total sales

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East meets West:
How Geely is connected to the world
157
Geely is now trying to expand internationally by
developing its battery manufacturing business with
CATL Geely Power Battery Co. Ltd and acquiring new
foreign brands like Proton’s Norwich-based
subsidiary Lotus or Daimler recently.
A communication entirely aimed at
ambitious Millennials
Sources: ft.com ; youtube
The brand mostly communicates on high
connectivity and ultra-modern design to directly
target a young customer base. They often
highlight their design teams and the famous
designer Peter Horbury to show their modernism.
Photos credits: BBC.com ; Geely ad found on Youtube
Geely Borui commercial - 2018
Geely’s marketing strategy (1/2)

ALL RIGHTS RESERVED
158
In 2020, Geely group wants 90% of its sales
to be consist of Evs. Last month, Geely
revealed their new pure-electric vehicle:
GE11.
Geely will also push forward with research
into hydrogen fuel cells and metal fuel cells.
Sources: global.geely.com Photos credits: global.geely.com
Geely GE11 – Launch ceremony, Feb 2019
Maintaining a Healthy Environment
Blue Geely’s pillars:
Eco-Friendly Material
Environment Saving New Energy
Intelligent Battery Temperature Control System
Lightweight for Low Emissions
Blue Geely: an ambitious new energy initiative
1
2
G-Blue
Geely’s marketing strategy (2/2)

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Who are the main customers of Geely?
China's Geely Gets Smartphone-Centric Millennials
159
More than 50% of Geely’s customers
are from first and second tier cities
51% of Geely’s customers are born
in the 1990s or later
Geely’s customers tend to prefer
SUVs among all types of cars
A new generation of young innovative consumers
who have a global vision and an international
mindset.
Their self-confidence and forward-looking beliefs
make them eager to break down traditions and
become trend-setters.
Sources: global.geely.com
Screenshot from a Geely commercial - 2018
Photos credits: Geely ; Youtube

ALL RIGHTS RESERVED
Trends (1/2)
The Chinese government is moving towards green technology and energy efficient led
vehicles, new energy vehicles with high charge ranges are favored in government policy.
Chinese people are increasingly moving towards more ecological and cheaper alternatives
that could constitute real obstacles for the car market, but the rising demands of road trips
with family are offering new opportunities.
The demand for second-hand car dealers in China has largely been as supported by e-
commerce platforms and mobile apps, such as Uxin and Guazi.
I.
III.
II.
NEW ENERGY VEHICLES ARE THE FUTURE
NEW MOBLITY AND ROAD TRIPS
SECOND-HAND CAR MARKET IS GROWING IN POPULARITY
167

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Trends (2/2)
168
Many brands aim to achieve intimacy with end users through digital platforms and monetize
customer value through both mobility services and offerings for digitally connected
lifestyles.
Increasingly sophisticated consumers want connected cars, meaning the cars of the future
will not just be used for driving, but could provide entertainment as well.
IV.
V.
NEW RETAIL IS CHANGING THE GAME
CAR CONNECTIVITY IS ON THE RISE

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Tips for auto brands in China’s market (1/2)
New cars buyers in China are young and connected consumers. As they gain purchasing
power, they are the future of the Chinese automotive market.
The paradox of the explosion of e-commerce in China is that buyers are still demanding
physical presence or human contact
Control your reviews and comments and opt for an influence marketing strategy because
brand reputation plays an important factor in the buying cycle of a car in China
I.
II.
III.
TARGET A YOUNG AUDIENCE
DO NOT NEGLECT OFFLINE CHANNELS
KEEP A CLOSE EYE ON YOUR ONLINE REPUTATION
169

ALL RIGHTS RESERVED
Tips for auto brands in China’s market (2/2)
Content and design provides an important first step in customer experience in China in 2019:
work on modern and sophisticated design for your website, your products and your
communication.
For auto makers, innovation linked to the e-commerce platforms and deepening
relationships with end users will be the key to benefit from the increasingly technology-
enabled vehicle market in China.
IV.
V.
RELY ON WELL-MADE DESIGN
LEVERAGE TO E-COMMERCE AND NEW RETAIL
170

ORIGIN:
DESCRIPTION DELIVERABLES
Project type:
ALL RIGHTS RESERVED
• Daxue consulting designed a research project that aimed at gaining
market benchmark insight to enable the future strategic development of
the group’s genuine parts offer to the independent workshop network.
• The project included an comprehensive assessment of the existing
product offer across all relevant channels as well as an qualitative
analyze of competitors’ business and support proposition to the
independent workshop network.
• Insights of the research were leveraged to build a strategy plan for
Volkswagen’s OEM wholesale business to the independent workshop
network in the years to come.
ORIGIN: GERMANY
Automobile
With increasing competition from independent aftermarket workshops
and the increasing vehicle age in the China automotive market, OEM
manufacturers are required to develop a strategy to face the opportunity
of incremental business from selling genuine parts to independent
workshops. Chinese authorities call upon open parts flow to aftermarket
workshops and Volkswagen wanted to develop countermeasures to face
the coming challenges. Lost customers from the group’s OEM network
provide potential for Genuine Parts sales into the aftermarket workshop
sector.
Project type: OEM wholesale strategy program
172

ORIGIN:
Project type:
ALL RIGHTS RESERVED
• Daxue consulting designed a research project that aimed at gaining
actionable insights to substantiate or refute the thesis that the
introduction of some specific vehicles could spur dramatic sales growth
in China for selected brands.
• The project included gathering quantitative data regarding the global
macroeconomic conditions, governmental support / opposition and
conduct a targeted survey among respondents who are high net worth
individuals to get a sense of preferences around luxury auto
purchases: discretionary nature of consumer spending in the luxury
goods market, purchasers’ economic confidence, emotional nature of
the purchasing decision.
• Insights of the research were leveraged to build a model of expected
luxury car sales under diverse scenarios.
ORIGIN: ITALY
Automobile
SUVs generated the most market growth in China in 2016-2017 and
continued to move upscale but China’s New Energy Vehicle mandate
policy and its generous electric vehicle incentives put the country at the
forefront for the low-carbon car market. Current governmental regulations
and policies at a national and local level tend to be more stringent,
especially for luxury cars with a high level of emissions. In order to
understand to what extent and how China’s consumption upgrade could
benefit premium auto manufacturers, the client, a global investment and
advisory firm, asked daxue to investigate the combined success of high-
end cars and SUVs and formulate investment recommendations.
Project type: Assessment of market penetration in China
173

ORIGIN:
Project type:
ALL RIGHTS RESERVED
• Daxue Consulting recruited and executed 3 focus groups with different
targets: Focus Group Discussions in Beijing with car dealers / experts
and with end-users.
• The collected insights and findings were then put together on an
executive summary for Allianz.
ORIGIN: GERMANY
Multinational financial
service company
Allianz is a German multinational financial service company
headquartered in Munich. At the core of its business is insurance, and
Allianz developed a unique telematics APP which aims to ensure the
users in car safety. Before launching the APP in China, and in order to
validate its unique value proposition, Allianz wanted to better map the
Chinese consumers needs and perception toward the APP. In order to
achieve its goal, Allianz hired Daxue Consulting for an in-depth research
project.
Project type: End-consumer APP testing
174

ORIGIN:
Project type:
ALL RIGHTS RESERVED
• First, Daxue Consulting took in charge the development of the
questionnaire into a tailor-made survey platform. The targeted
respondents (provided by DLL) were then contacted in order to present
the project and make sure of the cooperation of the different contacts
(manager position +).
• Survey was then sent to the panel, and results analyzed by Daxue
Consulting’s team.
ORIGIN: THE NETHERLANDS
Finance
DLL is a global provider of leasing, business and consumer finance
solutions, including vendor finance and factoring. DLL specializing on the
next industries: food & agriculture, healthcare, construction,
transportation & industrial, office technology, clean technology, and
mobility. Giving the rapid development of the industry and the growing
competition from both local and foreign firms, DLL is looking to better
map its complex business environment, notably its competitors value. In
order to achieve a better understanding of DLL’s competitive positioning
relative to key competitors in China and In order to maintain its position
as leading Finance provider , Daxue consulting will execute an online
survey with DLL’s selected audience on-behalf of DLL.
Project type: Survey of car owners’ driving behaviors and habits
175

ORIGIN:
Project type:
ALL RIGHTS RESERVED
• Daxue Consulting recruited and executed series of Focus Groups in
Beijing with market experts of the sector.
• The collected insights were then put together on an executive summary
for Samsung’s team to further analyze.
ORIGIN: SOUTH KOREA
Global electronics
company
In 2012 Samsung contacted Daxue Consulting to prepare and test the
launch of a new integrated technology for mobile phone. Samsung’s
“Voice recognition” technology was not yet fully adapted to the Chinese
market, and in order to validate the product development phase, the
Korean group needed to collect feedback from Chinese experts such as
Text-To-Speech engineers, voice experts and coaches, etc..
Project type: Product development test
176

The automotive market in china presentation by Daxue consulting

The automotive market in china presentation by Daxue consulting

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The automotive market in china presentation by Daxue consulting