JD.com and Tencent to invest $1.55b in Bitauto

Sales of cars go online, but shops close the deal

Shanghai GM Buick joined with Tmall to promote online car sales during the Singles' Day shopping promotion on Nov 11,2014. [Photo / Provided to China Daily]

Online shopping is now a way of life for millions in China and they are buying ever-larger and more expensive items - sometimes even cars.

During the nation's busiest online shopping period of the year, the heavily promoted Singles' Day on Nov 11, auto portal bitauto.com received 15,796 orders with a combined retail value of 1.87 billion yuan ($305 million).

On the same day, autohome.com.cn recorded 37,117 orders worth over 6 billion yuan, more than double the orders it received on the same day in 2013.

Alibaba Group Holding Ltd has not released figures on auto sales, but its Taobao and Tmall portals had combined overall revenues of 57.1 billion yuan on the day.

But despite the enthusiasm, some question whether the numbers measure online auto sales or advertising. Even online buyers negotiate, pay and take possession of their cars at traditional brick-and-mortar stores.

But whatever the terminology, auto dealers did attract more potential customers on the day.

A total of 7,352 dealers in 368 cities participated in bitauto.com's sales campaign and many said they had more visitors.

"The biggest advantage of online platforms lies in attracting potential customers," Chen Hongsheng, a senior sales manager at automaker Zhejiang Geely Holding Group, told Tencent.com. He said Geely's online shops have tens of thousands of visitors each day while each of its brick-and-mortar shops attracts some 50 visitors daily.

"At the current stage, the main purpose of online shops is to attract potential customers."

Experts said another major purpose to go online is brand building, an approach used by Tesla when it announced in late October it would take online orders at Tmall.

Jack Huang, associate partner at OC&C Strategy Consultants Greater China, said it is a smart move by Tesla because it positions the brand as customer-centric, progressive and technology driven. "By launching on Tmall, Tesla is playing up to the brand's image of transparency as well as the company's direct-to-consumer approach."

But Michael Ning, vice-president for corporate communications at Volvo Car China, said the dealership experience is still essential to car buyers.

"Few customers would be willing to buy a new vehicle online without touching it," said Ning.

He said buying a car is not like buying a book, so customers want to see, touch, drive and get their family's approval on the selection - all processes require a physical location.

Nicholas Speeks, president and CEO of Beijing Mercedes-Benz Sales Service Co Ltd, said online sales have a long way to go before they are truly significant in the market.

He said Benz websites have many registered users "but they seldom pay deposits online because they want to test drive and experience our models in traditional stores".

"Of course, we have our online platforms and we will go forward with the actual conditions," he added.