2012 Easy Vehicle Index released

The slight increase has become the consensus reached by the industry on the basic trend of the domestic passenger car market in 2012. However, if we compare sales volume between last year and this year, we would be surprised to find that from January to September this year, there was a 5 month increase in sales year-on-year, and a 1 month increase in sales year-on-year. At the same level, there was a three-month increase in sales compared to the same period last year. The overall increase was slightly higher than last year. In other words, micro growth is a market illusion.

Chart 1: Statistics on year-on-year sales of domestic passenger cars sold in this year and the first three quarters of last year (Source: Easy Index)

However, this view certainly incurs opposition from most auto companies. Because this year, most models are experiencing market declines in different degrees. Taking the compact car as an example, in the 93 models that are sold on the market, there are 26 models with sales growth this year; 31 models with the same sales volume; and 36 models with declining sales volume, 10 more models than the models with increased sales volume.

Chart 2: 2012 domestic passenger car market brand sales TOP10 (Source: Easy Vehicle Index)

The same situation also appears at the brand level. Compared with last year, among the top 10 sales brands, sales of the seven brands accounted for different degrees of decline. However, the share of Volkswagen brand holding the top spot soared by nearly 1%, setting a record for the highest sales volume of individual brands in the domestic passenger car market.

While most brand models endure severe cold, a few strong brand models are enjoying market saunas. How is this market phenomenon caused? This indicates that the domestic passenger car market will happen what kind of deep changes? For these two issues, Ping An Xinde conducted an in-depth research on the data platform of the Easy Vehicle Index. Here, briefly share with you the three most important findings.

The first conclusion: The fission of interest has made domestic passenger cars enter the market era of “slow growth and big collision”.

This year, domestic passenger cars show two core development trends. The first is "slow growth," and the market as a whole maintains a slow growth trend. The second is "big bang." The so-called big collisions are within each category-grade market, and the fission of interests splits the homogeneity of the existing markets into several interest-dividing markets. At the end of 2010, domestic passenger cars completed the fission of grades and formed a market segmentation pattern of 7 categories and 25 grades. However, in just two years, the fission of interests completely overturned this market pattern. By the end of October, domestic passenger cars have been further split into 7 categories, 25 grades and 43 profit-dividing markets. These interests have divided the market to compete for more space for development and a fierce blow. This is why auto companies and brand models feel the strongest reason for the strong market sentiment.

Take the compact car market as an example.

Chart 3: Brand sales of domestic compact car market TOP10 (Source: Easy Index)

Standing on the level of the category models, we can see the competitive situation shown in the above figure. Volkswagen still maintains a leading edge in sales with a sales share that exceeds the combined second and third largest Buick and Nissan. Buick and Nissan went hand in hand to form a second phalanx.

Exhibit 4: Brand Competition Patterns of Domestic Compact Car Submarkets (Source: Easy Vehicle Index)

If you change an angle and stand on the level of the model, you will see a completely different competitive potential. In the compact car market ahead of the public, the competitive advantage is actually concentrated in the high-end, sub-high-end and sub-middle models market. The competitive advantages of mid-range and low-end models are dominated by Nissan and BYD respectively.

Exhibit 5: Segmentation of interest in mid-size compact cars (Data source: Easy Index)

From another angle, when standing on the segment of the interest segment, we can see that the mid-size compact car is showing a competitive situation in the romance of the Three Kingdoms. The commercial-home model headed by the new Excelle, Cruze, and New Bora is like that year. The Cao Wei regime has the most powerful forces in the three interest orientations. However, the days when the entire mid-range model was previously dominated are gone forever. The home multi-functional vehicle headed by Tiida is like the Sun Wu regime in Jiangdong that year. Although the competitive forces are relatively weak, they can separate themselves out of an independent interest sky to fly themselves.

Interesting models are like the Suihan regime. The listing of the new Fox sedan and hatchback announced the birth of this profit-oriented model. In just seven months, Fox has already surpassed the new Excelle, Cruze, and the new Bora to become the largest-selling sub-brand in the mid-range model market. As a hydrological observation platform for domestic consumption of domestic passenger vehicles, the Easy Index records this important market change in real time and accurately.

Exhibit 6: Statistics of Concern Index, Contrast Index, and Car Index of Mid-size Compact Cars (Data Source: National Automobile Index for January-September Total)

From the perspective of the index of interest, the Fox sedan and hatchback were ranked 4th and 9th in the compact car in October this year. However, before the new models were listed, they ranked 38th and 16th. From the index values ​​in the chart, it can be seen that the sum of Focus index and car purchase index of Fox sedan and hatchback has surpassed all the sales brands of mid-range models and become the most competitive brand model.

This is the power generated by the fission of interests. This is the golden opportunity for the change of fate brought by the fission of interest to brand models. Such interest fission not only occurs in the mid-end compact car market, but also occurs in every category-grade vehicle market. This means that every automobile company faces a strategic opportunity to change its own destiny. The problem is that most auto companies are not aware of this.

The second conclusion: The fission of interest brought the contradictions of the high-level model market to a rush.

For a long time, high-end models above medium-sized vehicles have followed a pattern in the market trend: the country's economic situation is good, the overall auto market is warm, and the consumption energy of high-level models has become active. On the contrary, if the national economic situation is heavy and the overall automobile market enters the slow road, the energy consumption and enthusiasm of high-level models will evaporate.

However, this year, the economic situation in the country and the growth of the overall auto market have slowed down, and the market sales of high-level models have released satellites. Sales growth of medium and large cars, high-grade medium-sized cars, and high-end SUVs significantly outpaced the average increase in the overall market.

Exhibit 7: Statistics on the National Car Market Index for Large and Middle Vehicles in January-August 2012

Take the medium and large car market as an example. This year, the car sales index of the five best-selling models showed a trend of contrarian growth. What caused it? On the surface, it is the arrival of a new generation of Audi A6L models and the long wheelbase of the Mercedes-Benz BMW. In fact, the deeper reason is: the fission of interest has led to the transition from an official-to-business-level interest to commercial vehicle consumption.

China is a society with a strong sense of officialdom. The bureaucracy is not only the ruling class in Chinese society, but also the highest cultural stratum of the cultural elite, or the rich class that governs social resources and wealth distribution privileges. Therefore, the bureaucracy has become a common stratum among other stratums. The official-based culture has thus emerged and has developed into a core quality of China's elite culture. In China, auto companies are willing to regard the highest-level commercial vehicles as "executive vehicles." The appellation itself is vividly written: The official culture is the soul of a commercial vehicle. It is precisely because of this that Audi has become the top choice for business elites at the same time that it has won the title of "Government Vehicle."

However, most of the new generation business people who were born in the 70s and 80s of the last century were very disgusted with this official culture. What they want is a business-oriented culture that matches the greens of commercial landmark buildings, top leisure clubs, and golf courses. What they want is a new business model that can vividly mark this business-oriented culture. This is a challenge for Audi, who has the title of "official cars," but it is an excellent opportunity for other models to fly in the new interest sky.

Bury the official position, flying business standard. The fission of interest brought medium and large cars to the vast blue sea.

The third conclusion: The fission of interests reinforces the Harlow effect of customer's consumer psychology, causing the market's sales momentum to further converge on the strong models.

This year, there has been an unprecedented phenomenon in the market: In each category-level market, the sales volume of strong models has mostly increased significantly, and the sales volume of the following models have largely declined. And, the higher the model category, the more serious this phenomenon will be.

Exhibit 8: Distribution Pattern of Leading Vehicle Sales in Mainstream Markets

Small cars are selling 69 models; among them, 5 strong models account for about 40% of sales. The compact car is selling 94 models; of these, 20 hot models account for about 60% of sales. The medium-sized vehicles sell 48 models; of these, 11 models sell more than 70% of their sales. SUV is selling 59 models, and 11 hot models account for nearly 70% of sales.

Fission of interests is the main cause of this phenomenon. The fission of interest in a market means that consumer groups with dissimilated interests are separated from this market and regrouped to form a new market of interest. Consumers who remain in the original market after fission are customers with relatively clear and firm interests. What they love and buy is definitely the model that best meets the expectations of profit. So, which models best meet their interest expectations? This market is a strong model. The characteristics of the value of their models are due to the most in line with the interests of the market demand characteristics, only to get the most favored customers.

For auto companies, this is a very important strategic enlightenment: The fiercer and fiercer interests have become more fierce, and the market's sales momentum has gathered around a few strong vehicles. The competitive advantage of a strong model in turn creates a "Hello effect" in the minds of customers. The Harlow effect is also called "Halo Effect" in psychology. Halo was originally a ring of angels and saints in medieval religious paintings. When people see a halo on a person's head, they often think of him as a perfect and holy person. This halo effect also occurs in automotive consumption. The competitive advantage of a strong model makes it easy to believe: It can satisfy their interests more than other models.