China’s automakers are gearing up to take advantage of smartphones and Internet services as they attempt to match the connectivity capabilities of their international competitors. Expanding their development programs and partnering with outsiders are key elements in the efforts.
Though many Chinese are interested in entry-level vehicles, a large percentage want to be connected. Web-based services are attractive to a growing number of buyers, according to presenters at the Global Automotive Forum in Wuhan, China. Connectivity will play an increasingly important role in the transformation of China’s auto industry.
“The Internet mind-set will have a bigger influence on the Chinese auto industry,” said Zhu Fushou, General Manager of Dongfeng Motor Corp.
Many speakers said that if Chinese companies are going to compete outside national borders, they’re going to have to offer all the features and functions provided by automakers who have had global footprints for years.
“If companies can’t reach international levels, their products won’t be successful in the mainstream,” said Guo Qian, CEO of Qoros Auto Co. “HMIs and connectivity are two areas where we must definitely match international capabilities.”
This transition to high-tech infotainment services must occur along with improvements in quality. Chinese vehicles have been criticized for their numerous defects, forcing manufacturers to move forward with manufacturing improvements and advances in infotainment.
“Product innovation is needed to change the industry’s image of poor products,” said Zhang Xiyong, General Manager of BAIC Group. “We must also innovate to meet the changing preferences of consumers.”
Linking smart phones to cars is one of those preferences, several presenters noted. In China’s high-density cities, a high percentage of residents have smart phones. Vehicle designers are finding ways to link these phones to vehicles.
“Applications brought about by the Internet will bring new features to cars,” said Li Shufu, Chairman of Geely Holding Group and Volvo.
Consumers seem to be anxious to take advantage of these Web-based features and functions. Market researchers say that Chinese buyers are more interested in connectivity features than their American counterparts.
“87% of people in China are aware of the connected car, compared to 56% in the U.S.,” said Patrick Gardiner, President of Global Automotive at Nielsen. “45% in China rank telematics as one of the top five features they want in a car. They’re willing to pay for it, unlike Europe and the U.S. where customers are generally reluctant to pay for connectivity.”
Like other global suppliers, Chinese manufacturers are watching the inroads being made by consumer products. Automakers want to leverage these technologies to enhance their revenues while also keeping consumer companies from gaining too much clout in the transportation industry.
“Giants like Google and Apple are starting to make inroads,” Zhang said. “Our manufacturing business has to become more infotainment intensive.”
Other suppliers are focusing on different aspects of what they call the Internet mind-set. They’re making partnerships with electronic commerce companies to forge closer relationships with customers while also teaming up with groups in Silicon Valley.
“We are carefully leveraging the advantages of e-commerce; in July we signed a strategic agreement with Alibaba,” said Chen Demei, Vice President of SAIC Motor Corp. “We have an office in Silicon Valley that focuses on R&D.”