Introduction to the Cambodian Car Market
A few years ago visitors to Cambodia’s capital city would develop the impression every car on the streets of Phnom Penh was either a Toyota or a Lexus but fast forward to 2015 and things have started to change.
While it is estimated up to 70% of all cars in the country are manufactured by Toyota, the demand for different automotive brands has expanded at a staggering pace with over 25 authorized distributors operating in a market where new car sales range from 3,000 to 4,000 units per year.
It is generally agreed that up to 95% of new cars sold in Cambodia are either refurbished models or, more commonly, unlicensed grey market imports competing on price against genuine dealers.
In recent years, other Japanese automakers have successfully captured a share of the mid-range car segment including Nissan, Mitsubishi, Isuzu, Subaru and, most recently and prominently, Mazda.
Korean brands Hyundai, Kia and Ssangyong have made less of an impact whereas the well-known American brands Ford and Chevrolet are more visible with Ford ranked as the number two selling brand of new units sold annually.
However, even Toyota, the undisputed market leader, only sells 1,000 to 1,500 new units a year while Ford’s reports between 700 to 800 units sold with the remaining top ten distributors selling from 100 to 500 units each year.
The high end premium segment accounts for just 10% of new car sales volume but offers a variety of high value options from authorized distributors such as BMW, Audi, Porsche, Range Rover, Jaguar, Volkswagen, Mercedes and even Rolls Royce.
Enter the Chinese Car Dragons
At the same time as international players from Japan, Korea, America and Europe began launching in Cambodia so did a number of brands from the largest car market in the world – China.
In 2010, the top selling Chinese SUV and Pickup automaker Great Wall Motors appointed Worldwide Garage to be the country’s exclusive distributor and opened an impressive showroom on one of Phnom Penh’s busiest boulevards. After testing the market with a mix of commercial and passenger vehicles, they now focus on four key models: the Wingle Pickup, M4 Mini SUV, Voleex Sedan and the Haval SUV.
Despite initial ambivalence towards Chinese brands Great Wall Motor’s sales have steadily grown due to a series of savvy corporate deals with major corporations in the telecom, finance, FMCG and media industries. Recently Worldwide Garage made their largest sales order to date agreeing to provide more than 240 units to Cambodia’s biggest private transportation company which means Great Wall Motors now ranks as one of the top five authorized distributors in the country.
Other successful entries of Chinese automakers include Forland which is distributed by the local Worldbridge conglomerate and focuses heavily on the commercial sector with an offering of small, medium and heavy duty trucks that have proved popular with companies in construction.
BYD and FAW both entered the market on the back of investments made by Chinese owned taxi operators, but neither brand has been able to find an authorized distributor or generated additional sales deals since that time.
The most significant Chinese brand to enter into Cambodia in the past few years has been GAC Motor whose local operations are managed by a Cambodian-Malaysian joint venture called Global Automotive Company.
The GAC Motor brand was launched on a wave of media publicity arranged by IMS Consulting Group, a leading media and advertising agency in Cambodia, who coordinated a major press conference in Phnom Penh to announce the signing of an exclusive distribution deal. A high level of media coverage was generated with prime time television news broadcasting the event as well as more than twenty key national newspapers, magazines and news websites publishing articles about the deal.
GAC Motor’s initial launch was followed by a series of ongoing television advertising campaigns with the GS5 SUV and GA3 sedan models promoted as affordable luxury for the mid-range Cambodian market. So far the sales response has been positive with double digit growth between 2014 and 2015 as well as a number of high profile corporate sales of the GS5 SUV to important business owners in Phnom Penh.
The Impact of the Auto Industry for Advertising in Cambodia
According to data from IMS’s media monitoring ADEX data base both Great Wall Motors and GAC Motor have significantly contributed to a boost in ad spend by the automotive industry on television and in print media.
The automotive advertising category has now become the tenth largest spender overall in the media market spending more than USD $2,500,000 YTD by November 2015 with the car brand sub-category spend reaching nearly $900,000 in the same period.
Mazda is responsible for 60% of total car brand television spending followed by Ford in second place, but most interestingly Great Wall Motors is the third largest spender with GAC Motor in fourth position.
Surprisingly other key Japanese brands have spent considerably less on TV with Toyota ranking fifth, Nissan sixth and Izuzu in ninth position while for other international brands Hyundai is seventh, BMW eighth and Chevrolet tenth.
Growing Success of Chinese Cars in Cambodian Car Market
Chinese auto brands that have succeeded in Cambodia have proven to be those with distributors willing to make major commitments in setting up scalable operations as well as being able to invest in advertising to introduce their new models to the local consumer.
The advance of Chinese automakers has picked up pace since Great Wall Motors first launched in 2010 and over the past five years other key brands like Forland and GAC Motor have demonstrated the reliability and durability of their cars while targeting specific commercial and middle class audiences with increasing success.
Make no mistake that Cambodia is still a Japanese dominated automotive market, but there can be no doubt that Chinese brands have been able to achieve sizable annual sales growth – a fact seen by many industry leaders in China as proof of the competitive potential of their exports to emerging markets.
About the Author
Steven King has been General Manager of IMS Consulting Group in Cambodia for the past nine years and has also worked in a number of high profile publishing, editorial, research and media management roles in his career.
IMS Consulting Group was established in Cambodia in 2004 primarily as a media agency before emerging as a fully integrated provider offering comprehensive advertising, creative, PR, research, media monitoring and digital services.
The agency represents a fast growing client base of local, regional and international brands that make IMS responsible for the highest volumes of media placement in the country. Key clients include Cambodia Brewery Limited, Heineken, Tiger Beer, Anchor Beer, ABC Extra Stout, Gold Crown, Gold Crown Stout, Poldanmig, Great Wall Motors, KREDIT Microfinance, GAC Motor, The Pizza Company, Indomie Noodles, Milkita andother market leaders.
For more information visit www.imsgroups.biz