Daily Archives: July 9, 2009

Smooth Drive For Luxury Carmakers In China

Demand Continues To Grow In First- And Second-Tier Cities, As More Individuals Purchase First Automobile

China surpassed the United States as the world's biggest auto market for the first half of 2009 after June sales soared 36.5 percent from a year earlier (© Washington Post)

China surpassed the United States as the world's biggest auto market for the first half of 2009 after June sales soared 36.5 percent from a year earlier (© Washington Post)

Luxury automakers have been enthusiastic about the potential of the Chinese market for years, as the middle class began its rapid growth and more middle class individuals began to think about purchasing their first cars while wealthier individuals started “trading up” or buying their second or third vehicle. In recent months, as demand for higher-end automobiles shrank in developed markets, automakers have increasingly relied upon growth in the Chinese mainland to tide them over until higher profits started to show again in other areas. As growth there continues to lag, the Chinese market is increasingly looking like the true engine of sales for the short- to medium-term. Sensing this, the shift in automakers’ collective consciousness has turned distinctly eastward.

The Chinese market was, until recently, a blank slate for luxury carmakers. Until well into the 1990s, personal automobiles were still the domain of wealthy or powerful individuals, as China’s middle class was negligible in size. Through the post-WTO years, however, automobile segments from budget to luxury have seen strong growth, particularly in urban centers, where cars are both a luxury (as most megacities have relatively good, albeit crowded, public transportation) and a status symbol. Today, China Daily features an article about how steady growth of car ownership — especially higher-end cars — should buoy most luxury automakers for the time being, granted they retool their marketing and their product offerings for the mainland market:

Continue reading