China: Ride-Hailing Service Affects Ownership Model
November 28, 2017
By Vivi Wei and Jacob George
China is the world’s largest and most dynamic automotive market. Despite a slowdown in the growth forecasts, the potential is widely regarded as “infinite” based on the simple math that the United States has a vehicle-to-person rate of 800 cars for every 1,000 people while that number in China is only 205.
Can manufacturers be that optimistic to reach or approach the U.S. ratio? Probably not. There are some uncertainties with Chinese consumers’ willingness to own a car, including the emergence of ride-hailing services along with the robust development of mobile internet and payment. Such an intersection of digital capability and the service model has quickly developed into a valuable option for consumers.
A recent J.D. Power survey of consumer satisfaction with mobility solutions in China indicates that 19% of consumers are “very willing” and 51% are “slightly willing” to give up owning a car if mobility alternatives are available. (According to a similar survey in the U.S., 69% still want to own their vehicles.) This does not mean that vehicle sales in China will dramatically decrease in the near future; in fact, J.D. Power still forecasts a moderate, low single-digit growth in the next few years.
Willingness to Give Up Car Ownership In China
The survey also reveals that consumers in China are highly satisfied with the way they get around today. Compared with mobility options that were available three years ago, 85% of the respondents are more satisfied with their options. Consumers especially love ride-hailing apps like Didi, despite the fact that 57% have concerns about “privacy.” Apps like Didi are making consumers satisfied by offering huge “flexibility and convenience” (85%). The most-appreciated function is “the ability to make a reservation” (70%).
Interestingly, more than half of Chinese consumers born in the 1990s (51%) use ride-hailing app like Didi because of its “convenience and good user experience” while only 13% of U.S. Gen Z, those born between 1995 and 2004, also think so. The U.S. Gen Z choose such an app primarily to “avoid driving” (30%) and “personal safety” (38%).
Green travel has also entered the “fast lane,” as 65% of respondents in China said they will take an eco-friendlier method of transportation to go out whenever possible, including ride-share bicycles of which 20% would use once or more per week. Also gaining momentum is the concept of car-sharing in the Chinese market. More than half of the respondents know about time-share car rentals and 70% are willing to try it.
The Chinese also Love Green
The various markets continue to demonstrate that the alternative mobility options being discussed are not a one-size-fits-all solution. The Chinese market demonstrates a unique willingness for ride-hailing, green travel and car-sharing, all at a time when the vehicle ownership model remains in a growth cycle.
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Jacob George is vice president and general manager of J.D. Power’s Asia Pacific operations and Vivi Wei is a researcher at J.D. Power. Both live and work in Shanghai and are frequent users of ride-hailing services in China and can envision a day when they no longer need to own a car.
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