|China Goes for Luxury Cars|
|Written by Our Correspondent|
|Tuesday, 12 March 2013|
Recession, corruption investigations slowing sales
China's luxury car market, which has been growing at
a blistering pace as a rising upper middle class looks
for rolling status, looks like it is on track for 20
percent growth in 2013 despite what happens to the
rest of the auto segment, analysts say.
in 2012 as China's economic performance slowed,
luxury cars - a market largely owned by the Germans
- grew 20 percent last year. According to a new report by the McKinsey consulting firm, and titled
Upward Mobility: The Future of China's Premium Car Market, while passenger car sales have
improved at a 26 percent clip overall, luxury car sales have been averaging 36 percent annual growth.
Jinping and Prime Minister Li Keqiang have already begun waging.
Twenty-seven top cadres have already been relieved of duty on corruption charges.
Nervous cadres at the National People's Congress have asked that the leadership slow the pace
of reform lest it wreck the Communist Party.
Economists have reported that banquets have fallen drastically in number and that the sales of
other luxury goods have slowed.
the auto industry about the volatility of demand for premium cars in China and what that means
for continued market growth."
In its survey, however, the consulting firm said, " despite some uncertainty about the direction of
the economy, and shifting social attitudes about public displays of wealth, 80 to 85 percent of
Chinese consumers surveyed are confident in future growth and will continue to buy premium cars.
model ever six to eight years.
The buyers of premium models - those just a cut below the serious luxury models put out by
Rolls-Royce, Bentley and the McLaren, Lamborghini and Ferrari supercars—change every two to
according to the report, the Chinese bought 1.25 million premium vehicles, second only to the
Americans' 1.7 million. Sales are expected to three million by 2020, equaling those of Western
Europe, and surpassing the 2.3 million sales expected in the US market, McKinsey says, with
China possibly overtaking the US as the largest premium car market as early as 2016.
market is debatable.
A survey of Chinese respondents found that a majority of them expect Chinese automakers to be
producing their own premium cars within 10 years.
Apparently heartened by the strong performance of its Buick marque in China, General Motors is entering the market with its top-of-the line Cadillac.
Nissan wants to bring in its luxury Infiniti but is doing its best not to identify it as a Japanese car.
Japanese consumer products of all kinds haven't recovered from dramatic drop-offs in sales as a
result of xenophobia over the uninhabited Senkaku/Daioyu Islands, which both China and Japan
both claim as their own
months of 2013 fell13.3 percent and 4.1 percent respectively, while Nissan's fell 14.1 percent,
although that was better than their expectation of a 20 percent fall. And, while dealers report
that the worst is over, there has been no return to pre-boycott sales levels.
apparently benefiting from the fact that Audi was the first major carmaker into the Chinese
market, teaming with the state-owned First Auto Works in 1988 with an agreement to share
technology in an agreement under which 499 Audi 100s would be built.
Part of the reason for Audi's success is built on its Q5 SUV as wealthy buyers, as they have in
other countries, have increasingly turned to luxury SUVs instead of sedans.
considered the world's most prestigious premium carmaker - rose by only 4 percent, apparently
because its sales structure is fragmented into two distribution organizations, one run by
Mercedes itself affiliated with a local dealer for cars imported from Germany and another for
cars build locally with another state-owned company, Beijing Automotive.
While Audi and BMW outperformed the market, Mercedes-Benz's sales growth has dropped out
of the first tier.
bought cars for status and the ability to show off, the new McKinsey survey found that while 30
percent cited "reflection of social status" and 27 percent cited "self-indulgence," others said the
car was in effect a ‘business card' for credibility, others were attracted by sophisticated
functions and innovative designs, and the car as a "source of fun in life.
More than 60 percent of respondents regarded buying a car as much a priority as buying an
apartment or paying for their children's educations.
cars, valuing exterior styling, safety features, and comfort over the attributes favored by their
male counterparts, such as powertrain technology, socially recognized premium brands, and