Which Segment is the biggest Sales Zone in Chinese Automobile Market?

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Abstract:

We try to examine these three issues.

１．We analyze where are the sales volume segments in developing countries, and in particular in China.

２．We confirm the fact that Japanese makers put importance to middle and high price range in developing countries.

３．We consider why and how Japanese makers can put importance to middle and high price range. Moreover, from long terms viewpoints, how long will they keep its strategy.

Our conclusions are follows.

１．Sales volume zone is different from one country to another. Segment structure has been changing even in same country. Focal segments are different by countries.

２．At present volume zone in emerging markets are B and C segments. Price ranges are ＄6,000～30,000. Moreover the biggest volume zone is lower half of B seg. Price range are ＄6,000～12,000.

３．Shares of A segment have been decreasing in Russia, China, and India. Non automobile categories have been reducing excepting India.

４．As results of above 1. 2. 3.，Japanese makers can continue to take a middle and high price (mainly B, C,  D, and E segments) strategy for long period.

５．Demand for C･D･E segments (especially ＄10,000～40,000) have not been yet saturated. Commoditization of automobile has not come. Comparing with other industries, “Introduction” and “Growing” phases of product-life cycle in the emerging countries need long time, makers of developed countries might take a middle and high price vehicles strategy in emerging markets for long period.

６．On the other hand, low price ranges in A･B segments are “Red Ocean” with bloody battle including Chinese makers. We can not find “Blue Ocean” with no competitors. Because Chinese makers can easily enter the markets of ULCV･LCV such as Nano.

７．It is wrong that Japanese maker enter these ULCV･LCV price range markets right now in emerging countries. The reasons of that are followings. Firstly they can not maintain safety standards and environmental standards at such a low cost. Secondly it cause brand deterioration. Thirdly they can not get profit from “Red Ocean.” Lastly they can take a middle and high price vehicles strategy in emerging markets for long period, because the Introduction and Growing phases of product-life cycle will continue for more years in emerging countries.