Last week, while attending the FCC luncheon on China’s auto sector, a bit of time was spent on the clean car segment in China. It is a segment that has received a lot of attention lately as many of China’s firm launch their products, global investors look to China’s prowess in the battery sector, and the Shanghai Auto show put a lot of green out on display.
But for one consultant, Klaus of TNS, he is seeing things differently. That while China is clearly looking to make a name for itself as a producer of clean / renewable energy cars, it is going to find it difficult to develop a domestic market for these products. Unlike the solar industry, which also suffers from low demand, the primary issue is not providing subsidies – or even the pricing – but the positioning of green cars within the consumer mindset.
Klaus’s point was facilitated through a diagram like the one above ( I have recreated it based on my notes) that looks to profile the buying habits of buyers based on 4 characteristics, and whether or not they are: extroverts, introverts, aspirational, or affiliative.
So, the typical Ferrari or Hummer owner would fall into an extrovert / aspirational, where as a Buick minivan owner is more likely to fall into the affiliative section where affiliative buyers are following friends, buying safe, and buying for value to money.
A picture that when complete, he had 20 or so makes and models n the board with a story for each buyer.
When looking at this from the perspective of the green cars though, and in the context of the four types of buyers, it became more complex. That partly due to their new entrance into the market, their limited selection and/ or differentiation, and price points made to hit the middle market, green cars were having a tough time finding a home.
Sure, the Tesla was for the extroverted/ aspirational buyer, but what was the likely market for BYD’s new e6? Who, not the early adopters, would become the buyers of products that were seen as having limited range and features, but good for the environment? This was the question that he looked into, a question that lead him to see that each segment actually had different concerns – some very different.
It was an interesting discussion that revealed that there were still some hurdles in the market to be cleared, and left me to wonder a basic question – what if a regulation were to go into place that all cars had to be hybrid. The technology exists, and there is a fairly strong case for the environmental need for the technology, and by doing so it would essentially force the market to accept the product (the product being a hybrid car). firms could then focus on design, technology improvements, and building portfolios under that constraint.
To encourage the purchase of hybrid vehicles in 11 cities, the Ministry of Finance has recently announced a 