Analyzing Chinese Social Characteristics Through an MPV Vehicle Model

If you want to understand Chinese consumer attitudes, understanding how they choose MPVs will provide valuable insights.

From my understanding, while MPVs may not be as popular worldwide as SUVs, they hold significant recognition in both commercial and family use domains.

However, in China, we observe an intriguing contrast where MPVs dominate the commercial sector but are looked down upon in the family segment, showcasing a unique Chinese characteristic.

Among the various MPV models available, the Toyota Alphard stands unrivaled in China. This vehicle, which is considered an ordinary and common family car in Japan, is priced at around 5.4 million Japanese yen, approximately 40,000 USD.

Now, let's guess the selling price of the Toyota Alphard in China.

Surprisingly, it is priced at 900,000 RMB, roughly 126,400 USD.

Furthermore, due to continuous tactics of scarcity marketing in China, if you wish to purchase this car, you'll need to pay an additional 200,000 RMB (about 28,000 USD) to the 4S dealership, and only then might you receive the car within the following three months.

Isn't it quite magical?

In China, if you receive friends, business partners, or celebrities, having a Toyota Alphard as your business vehicle will greatly enhance your status and reputation, showcasing your capability and social standing.

Let me elaborate on an intriguing aspect of this situation:

The substantial price markup, is it due to the impact of tariffs?

The Toyota Alphard is a fully imported vehicle without local production in China. While tariffs do have an influence, the core factor lies in the imbalance between supply and demand.

Why doesn't Toyota establish an Alphard factory in China to produce more cars and sell to a broader audience?

This is a tacit understanding between Chinese consumers and Toyota. The Alphard's current prestigious status is closely tied to its scarcity. This scarcity goes beyond limited supply; it is rooted in a peculiar consumer mindset. The Alphard belongs to a category of luxury that ordinary people cannot fully comprehend. As long as the majority of people cannot grasp its high price, it instantly acquires an air of nobility.

If the Alphard were widely available, its perceived value would diminish. Similarly, if it were produced domestically in China, it would lose its sense of exclusivity. Hence, the supply of Alphard must remain limited, and it must be imported. Instead of reducing prices, increasing the price further highlights how unique its buyers are.

If Chinese people value "面子" (miànzi) to such an extent, why don't they buy Mercedes-Benz MPVs?

On one hand, it is true that some people find Mercedes-Benz MPVs visually unappealing. Chinese consumers are known for their emphasis on aesthetics when shopping, particularly for outwardly visible items. For example, as a wealthy individual, one might tolerate wearing old underwear but insist on wearing Armani-branded suits.

Another key aspect is that although Mercedes-Benz MPVs are expensive, they lack a sufficient premium. For a vehicle priced at approximately $100,000 USD like the Mercedes-Benz V-Class, people might perceive its features, materials, and brand value as being appropriately aligned with the price. This perception prevents them from experiencing the same sense of extravagance offered by the Alphard.

To illustrate, imagine gifting your girlfriend a $5,000 USD necklace; while it may hold a normal market value, gifting her a plastic phone case priced at an exorbitant $5,000 USD would evoke an indescribable and unparalleled sense of superiority.

The relationship between Chinese business receptions and the Toyota Alphard is deeply intertwined.

Firstly, it is rooted in the traditional Chinese concept of hierarchy, where the older and higher-ranking individuals are respected and revered. In the context of business receptions, the hosts are often considered the ones seeking favors or in a lower position, while the idea of showing respect and hospitality through "礼" (lǐ) - the act of being courteous and polite - is deeply ingrained in Chinese cultural behavior. Consequently, the hosts would extend exceptionally high levels of hospitality to their guests.

To establish this atmosphere from the moment of meeting, the choice of the reception vehicle plays a significant role. In China, only the Toyota Alphard, with its extraordinary price tag, possesses the enchanting power to create such an ambiance. Thus, this unique one-to-one relationship becomes firmly bound.

Then why do Chinese people not accept MPVs as family cars?

As regular family cars, MPVs are considered less friendly in terms of fuel consumption and parking convenience. However, the increasing popularity of electric vehicles has effectively addressed the issue of fuel costs. Currently, domestically-produced pure electric MPVs are rapidly gaining ground in the market, competing with models like the Buick GL8, Honda Odyssey, and some SUVs as choices for family cars.

Another reason is the deep association of MPVs with business settings. In business receptions, dedicated drivers are commonly responsible for driving, and the profession of being a "driver" is not highly respected in China. Consequently, many car owners tend to avoid using MPVs as family cars to avoid being perceived as professional drivers by others.

A side note to add is that Chinese people tend to associate larger vehicles with beauty, as they symbolize grandeur and strength. Hence, not only MPVs but also models like JEEP, Toyota Land Cruiser Prado, Land Rover Range Rover, and Mercedes-Benz G-Class have been extremely popular and retained high resale values in China for the past few decades. However, with the rise of domestic electric vehicle brands and the changing aesthetic preferences of the new generation, this trend is undergoing rapid changes.

Yet, the one constant remains— the Toyota Alphard continues to be an irreplaceable MPV in the realm of Chinese business receptions, where its price is unlikely to decrease.