Wednesday, 27 Oct 2021

BMW is missing out on China's karaoke fans, exposing digital gap

BEIJING (BLOOMBERG) – BMW rarely has to answer this question in Western showrooms, but it is becoming increasingly important for selling cars in China: Can I sing karaoke in this vehicle?

Customers in the world’s biggest vehicle market are demanding that sing-along apps such as Changba work in new vehicles.

Local manufacturers XPeng, Nio and BYD are at the forefront of this trend, besting Western rivals by offering models with karaoke microphones.

The push extends beyond music, with Chinese buyers expecting seamless access to features such as in-car payment and social media connectivity.

“We’ve identified this as a challenge,” said Mr Christoph Grote, BMW’s digital car chief. “Chinese consumers are the most demanding when it comes to digital technology in the car.”

Tapping into local tastes is crucial to win over customers in China, where electric-car adoption is accelerating and home-grown auto offerings are mushrooming.

The country is the biggest market for BMW, accounting for 36 per cent of sales, and Volkswagen with 40 per cent.

Local brands are trying hard to win over the digital-native crowd. Zhejiang Geely Holding Group earlier this year started Zeekr, an all-electric marque aimed at millennials, and carmakers are using local influencers to tout their models as online buying becomes more widespread.

Western manufacturers are lagging behind integrating Chinese digital ecosystems into their cars, according to global management consulting firm Kearney.

More than two-thirds of local consumers view Chinese navigation apps as a must-have feature and Western brands risk falling behind in the “everything connected” era, the consultancy said in a report last year.

While Western carmakers have traditionally viewed digital connectivity as a feature they can charge customers extra money for, their Chinese rivals are using it as an enabler to integrate third-party services, said Mr Bill Russo, chief executive of Automobility, a Shanghai-based consultancy.

“Such digital services are dominated by local ecosystem players in China and multinationals often lack the deep local collaborations needed to generate revenue from these services,” Mr Russo said.

BMW does not yet offer karaoke features in its cars, but has worked with Tencent Holdings to integrate a function to pay parking fees via the popular WeChat Pay app.

The manufacturer plans to use a joint venture formed last year with Nanjing-based technology company Archermind Technology Nanjing to expand its connectivity features and is open to additional partnerships, Mr Grote said.

“You need a technology road map for China and you need local capabilities,” he said. “Our joint venture allows us to develop directly within the Chinese technology ecosystem.”

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