团购恶梦 Group Purchase Is a Dealer Nightmare

Sam Flemming from CiC wrote an interesting piece on the rise in Group Purchase or better known as "Tuangou (团购)" in this month's Ad Age China.

While it's true that Group Purchase is becoming more popular for car buyers, it has also become a bit of a nightmare for the dealers. Several dealers have told me that, while they welcome tuangou, they also point out that consumers are still quite new to the whole process and expect huge discounts, despite the fact that cars are sold in China on very thin margins.

In addition, consumers might come and buy 20 of the same car en masse, but they often want different features and completely different engine sizes, making it virtually impossible for the dealer to provide discounts.

Sam is correct. Car companies need to pay greater attention to tuangou. The first step is education on what a Group Purchase really means. Avoiding explaining the rules will only create additional misunderstandings.