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Luxury brands up service level as competition grows

China Daily - In response to increasingly fierce competition in China's luxury car market, manufacturers have increased investment in dealer training to improve customer satisfaction and loyalty.

To offer professional instruction to its dealer staff, BMW recently opened a new training center in Guangzhou, its third on the Chinese mainland.

The opening of the new center has increased total training time within the company to 230,000 person-days this year, which is up from 182,000 person-days last year.

A person-day is defined as a day's worth of training for a single person.

The company's other two existing training centers are in Beijing and Shanghai.

According to the company, it is preparing to set up another training center in the northwestern province of Xi'an, but no timetable has been disclosed yet.

Additionally, BMW has training programs in 15 colleges or vocational schools across the country to cultivate technicians.

The company said it will continue to increase training capacity to support the expansion of its dealer network.

The number of BMW dealer outlets in China is likely to reach 420 by the end of this year, and they will employ about 43,000 staff.

Karsten Engel, president and CEO of BMW Group Region China, said that the company needs "professional, experienced and dedicated people" to deliver high-quality services that live up to the expectations of customers.

"The days of super-fast growth in China's premium market are over. The key topic of tomorrow is quality," he said.

In the first quarter, sales of luxury cars in China edged up 4 percent from a year earlier.

Though many analysts expect an increase of more than 10 percent for the full year, the growth is a far cry from the double-digit increases in the past several years.

Last month, Mercedes-Benz also opened a new training center in China.

The facility in Chengdu is the company's sixth in the country and its second-biggest one aside from the one in Germany.

Mercedes-Benz will offer 140,000 person-days worth of training to dealers this year, an increase of 40 percent over last year, according to the company.

It will add more than 75 authorized dealerships in China this year, with 45 percent of them in third- and fourth-tier cities.

Charles Mills, vice-president for global retail experience under JD Power and Associates, said that luxury car brands need to improve retail experience and service quality because of the high expectations of customers.

"The premium brand by definition has to provide customers a more complete ownership experience than just the product," he said.

He noted that in many Chinese dealerships - both premium brands and volume brands - people still have a transaction-based experience, where a salesperson or service agent performs a checklist of tasks that the brand or the dealer has assigned them.

"From a premium perspective, that's not where and how we create a deep, lasting relationship with customers," he said.

After-sales market

The potential for revenue from after-sales service is another reason why manufacturers are increasingly investing in dealer training, said Ye Sheng, auto research director of Ipsos in China.

During a time of slowing market growth and mounting price pressure, new car sales are not as profitable as before, but the market for after-sales services will continue to be robust, with double-digit growth expected annually in the next few years, Ye said.

To cash in on the surging segment, the number of independent repair shops and car care shops has mushroomed in China, creating direct competition for services from traditional authorized dealerships known as 4S shops.

In terms of volume brands, the 4S shops account for half the market share in after-sales businesses today and for luxury brands, the traditional dealerships still hold about 80 percent market share, yet the proportion will decline in the future, Ye said.

To keep the customers, dealerships need to provide fast services with transparent prices as well as "thoughtful, individualized services", he said.

Mills, of JD Power, also emphasized the importance of creating a highly individualized experience.

"Retail around the world - not just automotive, but fashion, furniture, computers - is going more and more toward individualization," he said.

"It's about you having a very different experience than the person next to you. It is where customers want us to go."

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