Driving sales online

By Liang Fei Source:Global Times Published: 2016-3-28 19:13:01

E-commerce platforms become increasingly important for automakers

Italian automaker Maserati recently joined the ranks of a growing number of car manufacturers testing out selling vehicles online. The ultra-luxury car brand, which last week opened its own store on a major Chinese e-commerce platform, surprised the media, the public and itself with a promotion on Wednesday that sold out faster than anyone expected. Analysts said automakers will likely further embrace online sales in the future. But considering the complexity of the auto market, it is still too early to say that the Internet will deal a major blow to traditional dealerships. Rather, it will instead provide automakers with a promising supplemental sales channel.

Italian automaker Maserati displayed the Levante, its first SUV at the headquater of e-commerce giant Alibaba in Hangzhou on March 23.Maserati launched its first flagship store on Tmall, a shopping platform under Alibaba, on March 21. Photo:CFP

On Wednesday, Italian ultra-luxury car brand Maserati put 100 of its latest and the very first SUV model up for sale online, two days after it opened its official store on Tmall, an e-commerce platform of Alibaba Group Holding.

The vehicles sold out in 18 seconds.

Considering that the Levante SUV retails for 999,800 yuan ($153,469), the sell-out was surprising for many people. Maserati China has called the result a "surprise" in a statement sent to the Global Times on Friday.

The Levantes sold out so fast that Maserati said it plans to sell several limited-edition vehicles exclusively through the online store, where it already offers a complete collection of Maserati models, including the Quattroporte, Ghibli, GranTurismo and GranCabrio, according to the statement.    

The Levante sale grabbed the attention of the media and the public. Because the successful event benefited both Maserati and Tmall, other luxury auto brands are expected to hold similar promotions in the future, said Qian Wenying, a senior industry analyst at Beijing-based consultancy Analysys International.

"You can't achieve such an impressive marketing event just by putting advertisements online," Qian told the Global Times on Friday.

'An effective marketing event'

Maserati is simply not the first automaker to experience the power of selling vehicles online. In September 2010, German automaker Mercedes-Benz held a group-buying event for its Smart brand of vehicles on Alibaba's e-commerce platform Taobao. It sold the entire batch of 205 cars in three hours and 28 minutes.

So far over 50 automakers have set up flagship stores on Tmall, including Mercedes-Benz, BMW, Buick and Volkswagen, according to a Tmall statement sent to the Global Times on Friday.

For Tmall, cooperating with Maserati has given it access to data about car owners, which the site could use to market car-related services and products, analysts said.

Because Maserati was technically just accepting orders for the Levante - customers only needed to pay a deposit of 49,999 yuan to reserve one - it is possible that some of the buyers might back out of the purchase.

"It remains unclear how many of the 100 orders for the Maserati Levante will go through, but regardless, this has been a very effective marketing event," Qian said.

Zhang Yu, managing director at consultancy Automotive Foresight (Shanghai) Co, agreed that Maserati's Levante sale was a success. He noted that selling online could help Maserati reach potential customers much more efficiently because the automaker only has 45 authorized dealers in China.

These kinds of promotions can also be helpful for brands that - like Maserati - target a specific group of consumers, he said. For brands like Audi, which cast a wider net, the tactic won't be as effective, though in Audi's case, it matters less because the brand already has a far-reaching dealership network.

There are other advantages for automakers selling online in China, especially in the high-end segment of the market. In China, luxury car buyers tend to be younger than those in other countries and regions. It is one reason behind the success of Maserati's Levante sale.

The average age of a Maserati Quattroporte buyer is 38 in China. For the Maserati Ghibli, it is 32, according to a report on the news website thepaper.cn, which cited Gao Mengxiong, a Maserati sales executive in China.

In its statement, Maserati said that opening a Tmall store is its way of "responding to a new generation of Chinese customers who are more Internet and e-commerce savvy."

In the US, buyers of luxury cars tend to be older. "This kind of promotion would not work as well in the US," Zhang told the Global Times on Friday.

Embracing the Internet

As consumers grow increasingly open to the idea of buying big-ticket items online, the e-commerce auto market in China has expanded rapidly over the past two years.

Some car information providers are trying to get a toehold in the market. New York-listed autohome.com.cn, which specializes in providing information and comments about different car models, started to sell cars online in 2014. Car-hailing app Didi Kuai also began selling cars to users in December.

As car sales in China slowed in 2015, many dealerships have been dealing with growing inventories, Qian said. Under the circumstances, traditional car dealers need to embrace e-commerce to boost sales.

Government policy is also becoming more favorable to selling cars online. According to a draft regulation released in January by the Ministry of Commerce for public comment, authorities are planning to open up the sales of cars so that authorized dealers are no longer the sole channel for sales in the future. The change would technically allow e-commerce platforms to sell cars directly to consumers, without cooperating with offline dealers.

A large number of dealerships have already opened online stores. In the future, more and more auto sales will take place online, analysts said. Still, despite its potential, e-commerce will not pose a major threat to dealerships. It won't be a repeat of what happened with consumer goods.

"Online auto dealership will still need to rely on the traditional auto sales network … and it would be a good supplement for traditional auto sales network for a very long time, given the complexity of cars," Zhang said.

"Right now, there is more cooperation than competition [between online and offline auto sales]," Qian said.

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