The Road Ahead: How Luxury Car Retailers In China Learned To Disrupt
Prestige car brands like Porsche and Tesla are redesigning showroom experiences by drawing inspiration from the world of luxury fashion. Image: Xiaohongshu screenshot
The showroom is often where it happens. This makes a critical difference for potential buyers of luxury cars: an opportunity to tacitly nudge consumers and turn a potential sale into a done deal. Although digital touch points have become more important, the in-person experience is still a key dynamic in the client's journey.
According to a Deloitte survey, 72 percent of Chinese respondents would prefer an in-person experience when purchasing their next vehicle. This is not about a transactional relationship between buyers and sellers: rather, what Chinese luxury vehicle consumers are seeking is the personalization of a highly customized service.
And so now many automobile firms are choosing to disrupt the traditional showroom model. Their roadmap? Where else, but the world of luxury fashion. Following the style industry's lead, car brands have adopted a customer-centric strategy that understands the necessity of seeing luxury primarily as an emotion, an experience. It's this insight that has changed the direction of the future of automotive retail in China.
Hero Flagship Locations
Wealthy shoppers can visit Porsche Studio at Guangzhou Parc Central Shopping Center. Image: Xiaohongshu Screenshot
Car showrooms have become a retail attraction in city shopping malls. High-end automobile companies now co-exist alongside designer labels to drive in-store traffic. The Chinese electric automaker Nio has opened Nio Houses in many prime retail locations, the first being at Beijing's Oriental Plaza in 2017. It is a strategy that takes the showroom experience to both prospective and existing customers. Qiling Lu, a marketing executive based in Shanghai wasn't planning to visit a Nio House but spontaneously went and said that " it was really fun to step inside and spend time here."
Similarly, Tesla Stores have appeared in numerous upscale shopping malls including Wenzhou Fortune Center, and wealthy shoppers can visit Porsche Studio at Guangzhou Parc Central Shopping Center. Flagship locations like these work to showcase the brand and enhance its prestige in the eyes of the consumer. However, boutique-style showrooms need to factor in the cost of high-rent locations and limited floor space that could curtail service offerings. It is a trade-off that has led Tesla recently to close a showroom in Beijing's "Parkview Green."
The Experiential "Pop-up"
Tesla's China car showroom in Fujian Xiamen. Image: Xiaohongshu Screenshot
There is something of an arms race among luxury automobile groups: to create the best-in-class showroom experience. These go far beyond the predictable in-house cafe. Tesla, for instance, has opened a Giga Museum at its store in Xiamen to demonstrate its cutting-edge technology. It's a smart move: a McKinsey survey revealed Chinese car buyers' passion for innovation compared to their German and US counterparts.
This is part of a wider trend, one in which automobile brands are learning to create the sense of hype usually reserved for high-end fashion labels. This even includes collaborations directly with the sector. See, by way of example, Maserati's Hybrid Love Audacious, a team–up with Chinese streetwear line Canotwait, launched as a Chinese-only limited edition at a pop-up store in Shanghai.
The opening of Casa Ferrari in Shanghai incorporates a Tailor Made Center that offers a range of specification options. Image: Xiaohongshu Screenshot
The showroom is no longer focused solely on the "show" but also on providing a range of services that are designed to add value to the complete brand offering. The opening of Casa Ferrari in Shanghai incorporates a Tailor Made Center that offers a range of specification options. Indeed, a survey of potential Chinese luxury-vehicle buyers reported that nearly 84 percent of respondents say that the ability to personalize their vehicle is important or very important. As Qilinglu notes, "I want my car to be unique".
Experience Centers such as the Audi House of Progress and Porsche Experience Center in Shanghai are positioned as flagship stores that seek to provide extraordinary brand- centered service. For example, Porsche offers a package that allows drivers to discover the sensation of driving a high-performance car on a purpose-built track. Automotive retail in China is adapting to the new normal of experiential luxury. Technology will provide new opportunities for automobile brands to connect and also nurture customer relationships, through ever-improving machine learning and AI.
Online digital showrooms will help bring the showroom closer to home. The metaverse might even create a more playful showroom experience, crucial for capturing the younger generations. However, as any mechanic or engineer knows, tools are all very well — what matters is how you use them.
The human touch will continue to be the key component of a seamless and satisfying purchase experience. Qilinglu views human interaction when buying a car as "very critical" that is about understanding individual needs. The persistence of brick-and-mortar showrooms is testimony to the fact that luxury remains, in essence, personal.
Glyn Atwal is an associate professor at Burgundy School of Business (France). He is co-author of Luxury Brands in China and India (Palgrave Macmillan).
Market Analysis, Retail
audi, cars, china, ferrari, luxury showrooms, maserati, NIO, porsche, tesla