Luxury automakers face off in China

03 January 2012

BEIJING: Luxury automakers including Lamborghini, Porsche and BMW are redoubling their efforts to boost sales across China, in recognition of the rising demand and competition observable in the country.

Lamborghini now has 11 Chinese dealerships in areas like Chongqing and Dalian, and is in the process of testing the waters in Qingdao, Shandong and Wuhan, with the goal of having 20 such sites up-and-running by the end of 2012.

"We see further growth potential in the Chinese market as more and more younger people desire an individual and uncompromising lifestyle," Stephan Winkelmann, Lamborghini's president and CEO, told the China Daily.

Porsche reported that China is today its second biggest global market. At present, over 50% of the firm's local sales are attributable to the Cayenne SUV, costing almost $160,000.

"We expect it to beat the US to be our number one market in 2014, with significant sales growth from another coming SUV model, the Cajun," said Helmut Broeker, chief executive officer of Porsche Motors in China.

"Some special spot markets, like Taiyuan, and Wenzhou, as well as more third- and fourth-tier cities will be our focus in the further development of Porsche's business in the future."

By the close of 2014, Porsche hopes to have 100 Chinese dealerships, measured against 39 today, as it seeks to tap increasing levels of affluence among drivers.

As an indication of this trend in action, BMW – trading locally via a joint venture called Brilliance China Automotive Holdings – recently revealed there was a two-month waiting list for its BMW 5 series.

"The premium car industry has enjoyed over the past two to three years an amazing growth," Olaf Kastner, CEO of Brilliance China Automotive Holdings, said. "We still, in the premium segment, will see a higher growth rate than the mass segment [in 2012]."

LMC Automotive, the insights provider, estimated 939,000 high-end cars were purchased in China last year, as the country overtook Germany, on a comparative total of 914,000 units.

Looking ahead, the company predicted the category should expand by 16% in China during 2012, versus an anticipated 4.4% improvement for Germany.

"Luxury car demand is still on the rise in China with low penetration rates," said Jenny Gu, an analyst at LMC. "Sales of such cars in developed markets like Germany fluctuate together with the economic cycle."

Audi currently leads the premium auto sector in China, and is also putting a heavy emphasis on the country to help it leapfrog BMW as the world's largest luxury marque by 2015.

Data sourced from China Daily, Bloomberg; additional content by Warc staff