Charm offensive drives pitch on brands

In a crowded market, sales gimmicks abound to lure buyers of luxury models and carmakers reinforce the effort with loyalty-building moves

PUBLISHED : Friday, 22 November, 2013, 3:02am
UPDATED : Friday, 22 November, 2013, 3:02am

Luxury car dealers on the mainland are resorting to offering customers massages, mini-golf and other gimmicks, hoping this will give them an edge in a ferociously competitive market, where brand loyalty is less common than in the West.

Premium car sales slowed on the mainland last year as the economy eased off the throttle and a new Communist Party leadership was installed, but momentum is returning, and the mainland is set to overtake the US as the world's top luxury car market by 2020, with annual sales of close to three million cars.

A victim of its own recent success, the mainland market has become a hyper-competitive battleground. Five years ago, there were fewer than a dozen luxury car models sold under five premium brands. Today, that has exploded to more than 90 models offered by 25 brands, market research firm TNS said.

The mainland displaced the United States last year as BMW's leading market, and the German premium brand sold 317,822 vehicles on the mainland in the first 10 months of this year, up 20 per cent year on year.

Liu Zheng, a 54-year-old history professor in Shanghai and owner of a BMW 5-series sedan, sums up the problem facing premium carmakers such as BMW, Mercedes-Benz and Volvo. "On Chinese roads, there are too many BMWs, too many Mercedes, too many Audis," he said as he looked around an inner-city Red Flag store in Shanghai. The premium brand is made by state-owned FAW Car. "There are very few Red Flag cars. If you own one, people would feel you're unique."

As Western premium brands have become almost commonplace on mainland city streets, moneyed mainlanders have scaled further up to Aston Martin, Porsche, Jaguar and even McLaren, Ferrari and Lamborghini to stand out from the crowd. Ford is launching its storied Lincoln brand on the mainland next year, adding to a competitive field that also includes the likes of Infiniti and Tesla.

At Audi's innovation exhibition at the Guangzhou car show this week, the German carmaker is showcasing its technologies and concept cars such as the Crosslane coupé, as well as the new generation Audi 3, including the plug-in hybrid A3 sportback e-tron.

"China is the market with the highest competition. There's no other market that offers more brands," said Boris Weletzky, a Beijing-based BMW sales and marketing executive tasked with leading the German firm's charm offensive and stopping drivers like Liu from defecting.

A majority of car buyers on the mainland, including those splurging on top-of-the-range premium models, are first-time buyers and have little loyalty to any global brand.

In an attempt to sway mainland hearts and minds, Mercedes-Benz plans to build a brand museum in Beijing, a move that Volvo is also considering. Ford recently sponsored a classic car exhibition on Shanghai's Bund with its historic Lincoln models, while General Motors plans to allow some potential buyers inside its Cadillac plant in Shanghai to see their cars being assembled, according to Bob Socia, president of GM China.

Dealers at BMW and Mercedes-Benz outlets offer select buyers pomp and ceremony at the clinching of a deal - including ribbon-cutting, hand-shaking, photo-taking and a banquet. Some Land Rover Jaguar showrooms provide massage services and video rooms, and its newly opened Shanghai store comes complete with a mini-golf course.

BMW year opened a store on the former Expo grounds in Shanghai this year that doesn't aim to sell a single car.

The German firm's "future retail brand experience centre" rather "sells" the BMW story, through historic model displays, photos and film. The aim is to hype the brand's heritage in a modern, art-gallery type environment.

"BMW was an admirable brand, but now people [on the mainland] see BMW, Mercedes and Audi as mass luxury brands," said John Shen, senior partner at consultancy Roland Burger. "BMW and others are trying to revitalise their brands, to create more emotional values, more unique experiences at the retail level."

BMW's levers for differentiation are twofold: driving the brand-enhancing effort, as in the Shanghai experience centre, and a new, non-pressure sales environment it is creating throughout its 200 retail outlets across the mainland. The firm will deploy a so-called product genius - who is not a salesperson and isn't there to quote prices or push deals - at each BMW dealer on the mainland. Interested customers were encouraged to drop in and browse - much as they might at a Prada or Gucci boutique - and they would be given the kind of attentive service a visitor might expect from Four Seasons and Ritz Carlton hotels, Weletzky said.

Potential buyers would be able to configure their dream BMW car on an iPad and then watch the result projected on a giant screen through 3D glasses.

At the two-storey, glass-panelled BMW brand experience centre in Shanghai earlier this month, Li Fuxi, an Audi-driving businessman from a small town in the eastern province of Anhui, sipped a cappuccino at the mini-coffee bar.

After an hour spent with the product genius, hearing tales of BMW and its history, Li was warming to the brand. "This place makes me feel good," he said. "I might even buy an i3," he added, referring to a BMW electric car due to hit mainland showrooms next year.