Two-Car Households Are Growing Fast

Fifteen Percent of Auto Sales Last Year Were to Households With a Vehicle

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SHANGHAI ( -- China is swiftly becoming a land of two-vehicle households. Last year, 15% of passenger cars were bought by households that had already owned a vehicle, according to the U.K.-based TNS Research International. That's up from only 10% five years ago.

"Most of them have two cars, but we even find households with three vehicles," said Klaus Paur, TNS Research's regional automotive director of Greater China and Korea.

A growing percentage of consumers are buying a vehicle for another member of the family or for recreation, he added. "In many cases, one car is used for business purposes while the other is used for family and personal usage. We can assume that this tendency will continue to develop."

Car sales in China continue to rise.
Car sales in China continue to rise. Credit: Normandy Madden
Other researchers have noted the growing volume of multi-car households.

The Chicago-based consultancy A.T. Kearney estimates 20% of passenger cars sold in 2009 went to households that had previously bought cars.

Sixty percent of the second-time buyers kept their first car, while 40% sold or traded in their first car, says Stephen W. Dyer, principal of A.T. Kearney Shanghai Management Consulting Co.

It's important for automakers and dealers to understand the contrasting priorities of first-time and second-time purchasers, Mr. Dyer said. "The first-time buyer tends to focus mostly on brand and price, whereas the second-time buyer's consideration of safety and power is more important."

Second-time buyers also place a higher priority on quality, and prefer more expensive cars. "This may be because these buyers of additional cars have more money to begin with," Mr. Dyer said. "It may also be because they have more experience and tend to value certain higher-priced vehicle attributes more."

Automakers are well aware of the trend, and are adjusting their marketing campaigns to take advantage of it.

During the World Cup soccer tournament, for example, Daimler AG targeted female Chinese consumers with ads about its B-Class compact car.

Wendy Wu, spokeswoman for Mercedes-Benz China, says women account for 60% of sales of vehicles in the B-Class segment. Households that purchase a B-Class Mercedes own an average of 1.6 vehicles, she said.

"We do expect a lot of them also have another car in the household," Ms. Wu said.

This article was first published by Auto News China, a publication of Crain Communications.

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