Luxury automakers drive online sales on Tmall.com

Luxury automakers do not depend anymore on conventional auto dealerships to drive sales in China. Instead, carmakers are turning to the internet to reach the country's wealthy and digitally active consumers.

Per a new report, L2 learns that out of 18 total brands benchmarked, 10 of which have flagship virtual stores on Tmall.com and eight of them use the website to sell vehicles. Notably, L2 is a US business intelligence company that tracks the digital performance of consumer brands. The L2 report mentions that high-end automakers on the platform are focused on accessible luxury despite concerns from luxury companies that Tmall.com may be too mass-market for their brand.

Aside from Maserati, all the luxury auto brands fall into the accessible category. It seems that luxury automakers are opting to use Alibaba Group's leading B2C website to sell their most mass-market models. Mercedes-Benz, for example, only sells its Smart cars on Tmall.com. L2 finds that Volvo dominates among the luxury automakers with five out of the top 10 best-selling models on Tmall.com.

But the percentage of luxury automakers with flagship stores on Tmall.com is still below than beauty brands that have 73 percent adoption rate. Less than one-fourth are luxury fashion labels and less than one-third are luxury watch and jewelry brands. Meanwhile, luxury automakers are willing to adopt online sales to prevent brand dilution. Maserati joined Tmall.com to reach customers in lower-tier Chinese cities where the brand isn't available at local dealerships.

As competition rises, luxury automakers "will realize dividends from forward-looking e-commerce investments," L2 researchers said in a summary of the report. "Chinese auto buyers are using digital technology at all steps in the purchase process. A majority of Chinese buyers already know what model they want before visiting a dealership, and online research is a key influence factor."

Additionally, Chinese consumers show the highest demand in the world for purchasing cars online. A survey has found 77 percent of consumers in China would be willing to buy cars digitally. China is projected to become the top market for luxury automakers by 2020 proving its brand as the world's largest car market.