Younger Americans Most Open to Chinese-Brand Vehicles; Willing to Overlook Privacy Concerns

by robby degraff, Manager of Product and Consumer Insights; Ed Kim, President and Chief Analyst

There are currently no Chinese vehicle brands for sale in the U.S., but what if there were? In a recent survey issued by AutoPacific, nearly half of respondents said they are familiar with Chinese vehicle brands and about 35% of respondents said they would consider (definitely or maybe) purchasing a new vehicle from a Chinese brand. The results are part of our bi-monthly Fuel Price Impact Survey, issued to a proprietary panel of vehicle owners in the U.S. The survey yielded responses from nearly 800 respondents aged 18-80 who were asked a unique set of questions about Chinese-brand vehicles and privacy concerns. However, that overall purchase consideration doesn’t tell the whole story. When broken down by age, 76% of respondents under 40 said they would consider buying a vehicle from a Chinese brand. Consideration then declines significantly by age group with only about 26% of those 60 and older willing to consider one. A surprising number of American consumers are familiar with Chinese car brands even though none are sold here currently. This is especially true among savvy Millennials and Gen Z, who would be the most likely to consider acquiring a vehicle from a Chinese brand.

Concerns About Privacy are High Regardless of Age Range

Overall, 44% of respondents said they would be very concerned about their privacy if Chinese-brand vehicles were sold in the U.S., and another 34% would be somewhat concerned. Even younger respondents, those under age 40, have concerns about privacy, with 73% saying they would be concerned about their privacy. However, despite strong concern among the under 40 age group, purchase consideration remains high. Privacy concerns about Chinese-brand vehicles are likely to eventually subside given that most of the connected smartphones, smart watches, laptops, connected home devices we are comfortable using every day are in fact manufactured in China.

Respondents of all ages were similarly concerned about potential national security risks if Chinese automakers were to sell their vehicles in the U.S. (68% to 82% depending on age group), and regardless of manufacturing location of the Chinese-branded vehicle: China, U.S., or other countries including Mexico.   

The Biggest Game-Changer for Consideration is Vehicles Built on this Side of the Globe

North American vehicle assembly is becoming more of an imperative “must” among automakers with EVs in order to meet eligibility requirements for mainstream vehicle shoppers to take advantage of federal tax credits for electric vehicle purchases. Could U.S. assembly of Chinese-brand vehicles also be a way to bolster consumer consideration? 16% of all respondents and 39% of those under age 40 said that knowing a Chinese-brand vehicle was built in the U.S. would increase their purchase consideration. Even 12% of respondents aged 60 and older, the least likely to consider a Chinese-brand vehicle, stated they’d be more open to one.

Heading south, a handful of Chinese automakers are already selling and will soon build lower-cost vehicles in Mexico for the Mexico market. Under current USMCA free trade rules, such vehicles could potentially be eligible for the full tax credit if they are sold in the U.S., as well as avoid the just-announced 100% tariff announced by the Biden Administration on Chinese-built vehicles.

When gauging consideration for a Chinese-brand vehicle if it were assembled in Mexico and then sold here in the U.S., about 37% overall would definitely or maybe consider a Chinese-brand vehicle made in Mexico, with that jumping to 73% among those under 40. Only about 29% of those 60 or older would consider a Chinese-brand vehicle built in Mexico.

EVs from Chinese Brands Could Solve Many of the Roadblocks Holding Up U.S. Buyers

It’s no secret Chinese brands are building some of the most innovative new EVs with striking technology, cutting-edge software, hyper-fast charging speeds, and fun features desired by younger buyers, and doing so at price points that significantly undercut what EVs from American, Japanese, Korean, and European brands currently sell for in the U.S. market. AutoPacific research has shown a main reason many Americans are hesitant towards EVs is purchase price, and Chinese-brand EVs could potentially offer appealing EV products that could generate excitement for EVs at much more affordable price points.

Despite the punishing new 100% tariff on Chinese-built automobiles, it is likely only a matter of time before they arrive on these shores – just as Japanese automakers did decades ago despite efforts to limit their presence here. Younger generations of shoppers are clearly aware of the enticing products Chinese automakers are cooking up overseas. It’s only a matter of “when” they’ll be able to get their hands on them.

Consumer Demand for In-Vehicle Marketplace Capabilities is Growing

by Robby DeGraff, Manager of Product and Consumer Insights

With automakers prioritizing connectivity and exploring new ways to generate revenue after the point of sale, consumers are becoming more interested in the ability to purchase items or services directly from a vehicle’s center infotainment screen. This feature isn’t necessarily “new.” Over the past decade, automakers have tried testing the waters with in-vehicle marketplaces but to the reception of little actual interest among consumers. However, recent breakthroughs in screen sizes and intuitive software with over-the-air updates, and a booming e-commerce scene have prompted automakers to give this feature another go. AutoPacific research has seen demand for the ability to purchase products, technologies, and vehicle upgrades directly from a center infotainment screen grow by 8% pts YoY. We predict that figure to continue to rise.

18% of all new vehicle intenders, and 29% of EV intenders want to use their touchscreen for transactions

When surveying new vehicle intenders, 18% of those who plan to buy a new vehicle within the next three years want the ability to purchase products, technologies, and vehicle upgrades directly from a center infotainment screen. Past research has shown younger consumers are generally more comfortable and open to connected technology in their vehicles, as well as electrification. That’s expectedly the case here, with demand peaking among those ages 30-49 before dropping sharply.

Befitting, intenders of EVs who likely anticipate spending time waiting for their vehicle to charge, want this feature the most and considerably more so than ICE intenders (+16% pts). Automakers with EVs in their lineup could benefit by providing consumers in-vehicle marketplace capabilities, since these EV intenders frequently use a vehicle’s center infotainment screen for certain activities while parked, including streaming video content, playing games, partaking in video conferencing, and browsing the internet.

Regardless of powertrain or segment, this feature could become a must-have among families, as demand was more than twice that of households without any children. From placing food orders while waiting in the school pickup line to purchasing heated rear seats while on a winter road trip, obtaining products and services conveniently through the center infotainment screen can be a reprieve for busy parents. Relevant products, services, and upgrades catered specifically to families’ needs should be readily available via an in-vehicle marketplace.

Enhancing the vehicle and ownership experience over time

Beyond common goods and services, certain features and technologies that weren’t initially offered or added to a vehicle at time of purchase can be downloaded later through an in-vehicle marketplace. These can include ADAS features, comfort amenities, and even performance-focused treats like quicker acceleration and extra range for EVs. We believe this opens the door for manufacturers to let an owner easily enhance and better their vehicle over time. Maybe you didn’t think you’d need a hands-free highway driving assist when you first drove your vehicle off the lot…but now you suddenly do because you’re road-tripping a lot. A few minutes and taps on the center touchscreen, and you’ve just upgraded your vehicle without ever stepping foot in a dealership.

Concerns and considerations to ensure seamless transactions

Earlier attempts at in-vehicle marketplaces were flawed by complicated on-screen steps, lagging connections and syncing of an owner’s payment methods, as well as a relatively small number of participating vendors. In order to ensure best practice for a consumer to purchase products, technologies, and vehicle upgrades directly from a center infotainment screen, the process must be as quick, easy, and straightforward as it would be to do so using a mobile device. Any interruption, glitches, or difficulty during an on-screen transaction would likely see the consumer immediately resorting to completing the transaction on their smartphone.

Furthermore, privacy may be a real concern for some consumers, even those open to having connected technology in their vehicle. 66% of all respondents, and 70% of those who want the ability to securely purchase products, technologies and upgrades from their vehicle’s center infotainment screen say they are concerned about their privacy due to use of various technologies. Transparency, a way to opt out of a transaction if desired, and of course security for all stored payment methods need to be guaranteed by the automaker.