Volkswagen, German Carmakers Could Gain as Chinese Switch

Volkswagen AG and its German counterparts Bayerische Motoren Werke AG and Daimler AG could benefit as more than 90 million Chinese car owners switch vehicles in the next few years because they’re the preferred choice of the country’s drivers, a study has found.

About 40 percent of Chinese car owners plan to swap their domestic-brand cars for a Volkswagen, while almost 90 percent of those looking to upgrade are picking Volkswagen’s Audi, BMW, or Mercedes-Benz, the Boston Consulting Group said in a research report. Chinese brands could emerge the biggest losers, with around 30 percent of current owners of such cars telling BCG they would stick with Chinese brands.

“Chinese drivers are far more eager to switch brands than average consumers in developed economies,” BCG said in the report. “Success in China will increasingly depend more on automakers’ ability to keep existing customers and to lure customers away from competitors.”

The report highlights the increasing importance of China, already the world’s largest auto market, as a battle ground for car companies. The market could grow 33 to 35 million vehicles a year by 2020, according to General Motors Co.’s projections. Automakers are expanding production capacity and adding products to win over customers and consolidate market share.

Owners of Chinese brands said disappointment with basic quality and performance was the biggest reason for them to look elsewhere, while premium drivers switch brands to seek more comfort and better after-sales service, BCG said, after interviewing 2,400 Chinese car owners.

The booming Chinese auto market is expected to slow in the coming years, with a growth rate of 2 to 3 percent by 2020, the report said.

— With assistance by Alexandra Ho

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