By Tong Na

At the beginning of this year, in order to drive domestic demand, China launched a range of favorable policies on encouraging auto consumption, such as reforming fuel oil tax, reducing the tax on purchasing autos and "autos going to the countryside". Driven by these policies, China's auto industry has witnessed rapid development. One of the reasons that China's auto market can realize rapid development results from the growth in the secondary and tertiary markets. Especially, the mid west and third-tier markets have experienced the rapidest growth and become the biggest impetus for the growth of the auto market this year.

Why the secondary and tertiary markets accelerated to initiate?

Related data shows that the rapid growth of China's auto market mainly relied on the first tier cities from 2002 to 2004. However, since the beginning of 2004, the secondary and tertiary cities have developed gradually, which have become the main supporting forces for the nationwide auto market to keep rapid growth.

From January to September of 2009, the growth rate of auto consumption in China's first-tier cities is 33.6 percent, second-tier cities 41 percent, and third-tier cities 51.4 percent; the contribution degrees of the market growth in the first, secondary and tertiary markets are 26.4 percent, 39.7 percent and 33.9 percent respectively. Data shows that it's an undoubted fact China's auto market in secondary and tertiary cities has witnessed a rapid development.

Tracing it to its cause, the central government has launched a range of policies on promoting the sustainable development of the auto industry and stimulating the consumption, such as halving the tax on purchasing the autos with the emission volume of 1.6L and below, cancelling road maintaining fee and "autos going to the countryside". As residents in the secondary and tertiary markets have lower income than those in the first-tier cities, the popularity degree of auto consumption is lower than that in the first-tier cities, the household autos mainly focus on economic cars and they are more sensitive to the auto price. Such policies like halving the tax on purchasing the autos with the emission volume of 1.6L and below enable them to enjoy real benefits. Meanwhile, a huge rigid demand exists in China's auto market, and most of which is sourced from the secondary and tertiary market. Because it's basically the first time for most of the consumers in such a region to buy autos, the demand on auto consumption is relatively higher. Statistics from State Information Center shows that the year of 2009 is the second jumping-off point of rapid growth for China's auto industry. In such a growth period, it is expected that the auto population per 1,000 persons will reach 100 sets. There is no larger growth space in the first-tier market while in the second and third markets, there is huge development potential.

As for the question that whether the secondary and tertiary markets can achieve sustainable development or not, Xu Changming expressed that the secondary and tertiary markets can support the nationwide market with stronger sustainability. The secondary and tertiary markets are provided with a huge population basis. Viewing the status-quo, the absolute proportion of passenger vehicles is low, but viewing from the tendency, the trend of the year-after-year ascending of the market share has emerged. Additionally, the power of natural growth in the secondary and tertiary markets is also becoming strong. Seeing from the year-on-year growth of China's passenger vehicle sale in domestic market, from January to May 2009, the growth rate of A00 and A0-class cars is very swift; during the last several months of 2009, the sales volume of imported and top-grade autos has also witnessed an obvious growth. When entering August, the growth rate of imported autos transferred from the negative to positive, and the year-on-year growth rate reached 1.3 percent; in September, the growth rate reached 37.1 percent; in terms of top-grade cars, the growth rate also reached 62.8 percent in September. Therefore, seeing from the two growth curves, the growth of China's auto market has not depended on policy driving absolutely, but showed the market's own power plus the influence of state macro-economic factors.

The secondary and tertiary markets activate the change of marketing

In 2009, what the auto industry's core judgement on the secondary and tertiary markets is that "the secondary and tertiary markets have played a leading role in the auto market's rapid growth in 2009, and the auto market has inclined to the secondary and tertiary markets obviously." The fast initiation of the secondary and tertiary auto markets has been undoubted, but for auto enterprises, there is a question that must be answered this year, that is how to realize a rapid sinkage of their own marketing networks and to promote their brand influence with consummated service. Xu Chao, Director of Brand Planning Department of Huachen Automotive Group Holdings Co. (Huachen Auto for short), expressed that, judging from the status this year, it can be said that "Who wins the secondary and tertiary markets, who will win the auto market, even the future."

Xu Chao said, currently, Huachen Auto has conducted distribution in 70 percent of the secondary and tertiary markets, and almost all enterprises in the industry has realized 70 to 80 percent coverage in such a market. However, he also advised that facing the suddenly initiated secondary and tertiary markets, it is improper to apply such an exploitation manner of "claiming markets by making preemptive investments", and what shall do more is to conduct a further research on how to do intensive work and consolidated basis. Xu Chao believed that the current research of auto enterprises on promotion was insufficient for stretching downward further from the third-tier market. All are using the mode of the first-tier market to "image" and "believe" how should they operate. In fact, "the secondary and tertiary markets still need researching well."

We shall also see that the secondary and tertiary markets are facing a rather favorable development opportunities and environment. At the time when automakers began to focus on the secondary and tertiary markets successively, it also means the competition among all automakers has proceeded in the secondary and tertiary market. To excavate the potential of the secondary and tertiary markets, what the automakers need to do is to map out proper marketing programs and establish brand image in accordance with the characters of their own brands and products together with the local market's consumption, meanwhile consumers' positivity shall also be fully mobilized. What's more, with the gradual opening of the secondary and tertiary markets, local consumers' sense on brand and service are strengthening gradually. It has been insufficient that simply using low price to attract consumers. Same as the first-tier market, brand and service construction is still the key factor to guarantee automakers' long-run and sustainable development.