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Jun
2015

Luxury Cars December 2012

Middle class and affluent consumers demand luxury cars

In addition to the lower entry price, demand for luxury cars is driven by a growing volume of wealthy middle class individuals because; the car culture in China is immature so the measure of a suitable car is large and/or luxurious, buyers have nowhere else to invest their money, and government officials have in effect set a bad example to the masses by adopting luxury vehicles for official duties.

 

Brand activity

Bentley

  • Hefei and Ningbo 4S dealerships opened: The new Continental GT V8, Mulsanne Diamond Jubilee, Continental GT W12, and Continental Flying Spur were all on show at the Hefei opening ceremony.

BMW

  • The brand announced that it would not continue supporting cars under warranty purchased through the USA.
  • The CEO for China Christoph Stark announced his retirement in Q1 2013, after eight years in charge
  • 5 more 4S dealers opened.

Ferrari & Maserati

  • 14th Dec, Ningbo Bojun Ferrari & Maserati dealership opened
  • 13th Dec, the world’s largest Ferrari & Maserati 3S dealership opened in Shanghai

Aston Martin

  • 30th Nov, the 13th dealer opened in Chongqing, as a result more cars were sold in the city via the dealer than had been by attending the cities international auto show for four years

Jaguar Land Rover

  • 12th Dec, the 102nd Jaguar Land Rover dealership in mainland China opened in Zhenjiang, 46 more signed authorized dealerships are under construction.
  • 27th Nov, Two Jaguar Land Rover 4S dealers opened on the same day in Beijing
  • From Jan to Nov, JLR sold 65,000 cars in China, a 75% increase year-on-year.

Bugatti

  • Bugatti sold 6 supercars in the first three quarters of 2012, which created a new sales record, the cars include the Bugatti Vitesse, Bugatti Veyron Grand Sport Cabriolet and Bugatti Veyron Super Sport.

 

The German executive triangle

When it comes to luxury executive transport in China, three German brands lead the field; Audi, BMW and Mercedes. Audi established themselves as defacto suppliers many years ago by being adopted as the vehicle of choice for government officials and their departments. The brands designs were considered as stylish but understated, and therefore suitable for this group of individuals, and production in China commenced. A decade or more later, BMW started production, their designs were considered more stylish and suitable for the newly monied and ‘flashy’ people, and two years after that Mercedes production began. The products produced locally were initially the mid sized vehicles, the A6, 5 series and E class, the large limo’s still imported, holding greater status being foreign made, and of course higher prices.

Since that time, all three brands have made huge inroads into the market, introducing new variants of the mid range cars with extended legroom in the rear, and then applying the same rules to their compact range. The market for SUV’s began to increase in recent years, and now all the brands are doing well in this segment, BMW recently introducing the X1 to great acclaim. However, this year Audi and BMW in particular have started to leave Mercedes standing. The former is selected by those who feel a need to be understated, either because of personality, or because of their proximity to officialdom, the latter is seen as a cool brand by the new rich, and has increased unit sales from 15,500 in 2004 to a projected 300,000 this year. Mercedes has a way to catch up, and naturally other brands such as Jaguar are taking small pieces out of their market share.

The status of a ‘luxury’ car in China is a necessity to anyone who wants to be considered successful, they must arrive at meetings in it, talk about it and be seen in it. Unlike much of the west where your clients would assume you were making too much profit if you had a large luxury car, here in China the reverse psychology applies. Add to this the growing wealth of the middle classes and the sheer numbers of consumers here the market looks positively rosy for the German triangle.


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