REPUBLIKA.CO.ID,JAKARTA -- Chinese car manufacturers are considered to be trying to gain a significant market share in countries that have competitive markets such as Indonesia. The way to do this is by providing affordable prices.
"There are several reasons why Chinese manufacturers might choose to price their vehicles at affordable prices," said automotive expert and academic at the Bandung Institute of Technology (ITB) Yannes Martinus Pasaribu, as reported by ANTARA, yesterday.
He believes that there are several reasons for automotive manufacturers from China to present vehicles with abundant features but at fairly affordable prices. The first reason is that Chinese brand cars are quite affordable at the moment because they want to gain a significant market share. Especially in countries with quite competitive markets like Indonesia.
Offering products at affordable prices along with high quality machines and attractive designs can be an effective way to attract consumer attention. "This strategy allows new manufacturers to penetrate markets that are already dominated by more established brands," he said.
The next reason is to pursue large sales volumes. High sales volumes not only increase market share, but can also help achieve economies of scale which can ultimately lower the per unit cost of producing electric cars.
The reason Chinese manufacturers present vehicles with economical value is their introduction as new entrants to the automotive industry. This is an effective way to build a brand image.
Consumers who are initially attracted by price may become loyal customers if they are satisfied with the quality of the design and technology provided along with the product guarantee, as well as the 3S (Sales-Service-Spare Parts) service provided by the manufacturer.
The next reason, according to Yannes, is a tactical response to highly competitive market pressure from various established brands such as Japan and South Korea. "Chinese manufacturers may see that the only way to compete effectively is to offer better value through lower prices alongside high-quality products," he explains.
The final reason is the fluctuating economic conditions and the purchasing power of the majority of automotive consumers in Indonesia who still seem to be stuck with incomes that are not very high. These conditions make appropriate pricing especially critical.
Affordable prices can be a very rational determining factor for many consumers when deciding to buy a vehicle. "The right price range for Chinese vehicles is to target the largest Indonesian automotive market, namely in the price range from IDR 150 million to IDR 500 million," Yannes said.
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