New Models, Stimulus Package Continue To Drive Growth In World’s Top Automotive Market Despite Global Woes
China is one of Audi's most reliable and profitable markets; As Chinese luxury auto brands emerge, will they retain their dominance?
The sustained growth seen in the Chinese automotive market over the last year has shown that the vast Chinese market — vast both in size and in potential customers — still has plenty of room to grow. For luxury carmakers, who’ve had a tough year in markets like North America and Europe, recent figures that show Chinese buyers are still motivated to part with their cash are welcome, to say the least, as formerly reliable customers in the US and other major economies think twice before signing on the dotted line.
According to this Wall Street Journal Asia article, growth in the Chinese market has been unprecedented in recent months for foreign luxury automakers, and with the stimulus package — aimed at infrastructure projects — taking effect, companies like Audi (a favorite of China’s government elite), BMW (the flashy entrepreneur’s choice) and Mercedes (the mark of a true “sophisticate” in China) expect to see their fortunes continue in the years ahead:
Audi’s sales in China rose 37% in September from a year earlier to more than 15,000 cars, marking a new record level in terms of monthly vehicle sales, the Ingolstadt, Germany-based auto maker said.
In the January-to-September period, Audi’s sales totaled 108,859 vehicles in China, up 20% from a year earlier.
Posted in Automobile, Business, China, Investment, Luxury
Tagged Audi, auto, bmw, car, China, growth, Investment, joint venture, Luxury, luxury car, luxury vehicles, mercedes-benz
Will Bentley Follow The Success Of Rolls-Royce In The Chinese Market? Or Will More Chinese Luxury Buyers Opt For Rival Brands?
The Bentley Mulsanne includes many features popular in the Chinese market, such as a spacious interior and chauffeur-ready driver's seat
As we’ve pointed out time and time again, with the global doldrums cutting into the vehicle budgets of many luxury consumers in developed markets like North America, Japan and Europe, high-end car companies like Rolls-Royce have increasingly looked to emerging markets like China to get them through the economic crisis and create a new, loyal buyer’s market. As Chinese luxury models become more prevalent (and popular) over time and truly begin to rival the dominant luxury models by BMW, Mercedes-Benz and Porsche, automakers at the highest end are already starting to plan ahead for a strong China strategy to ensure their brands remain at the top of the heap for years to come.
Following the lead of the 2010 Porsche Panamera, which was unveiled at this year’s Shanghai Auto Show, Bentley has taken the lid off of its 2011 Mulsanne, with what is sure to be an eye towards the Chinese market — where the country’s ultra-rich still have no domestic alternative that can match Bentley quality. After making its initial debut in August, the Mulsanne has become the talk of the high-end luxury scene, not least because it is the first all-new Bentley model to roll off the production line since the 1930s. As Motor Authority writes, though this car is most certainly beyond the budgets of most lustful car enthusiasts, it is a sight to behold and has an engine to match:
Posted in Automobile, Business, China, Luxury
Tagged Audi, auto, automotive, bentley, bentley mulsanne, bmw, car, China, chinese, ferrari, mercedes, mulsanne, porsche, rolls-royce, sports, vehicle
Western, Chinese Brands Vie For Customer Loyalty As Emerging Middle Class And “Nouveau Riche” Demand Continues To Grow
Buick has capitalized on its reputation for quality and luxury in the Chinese market, enjoying massive success and launching China-only models like the Excelle
As demand for new vehicles has remained sluggish in developed markets over the past two years, major automakers have rightly looked to retool their strategies to draw customers and build their brands in new markets. As we’ve written before, selling your brand in markets like China, where customers expect different things — and derive status from very specific brand attributes — represents both a major opportunity and a new challenge. A good example of an automaker that has benefitted from the “blank slate” allowed it by entry into the young Chinese market is Buick, which has a reputation as a car for older, or middle-aged, drivers in its native market, the USA, yet has — through aggressive branding and advertising efforts — developed a reputation as a sleek, luxurious, youthful brand in the Chinese market.
So how can car brands optimize their brand equity in China? Depending on where they come from, their strategies differ greatly. While American car makers like Ford have had great success in overseas markets like Europe by pushing their reliability and value, in the Chinese market imported cars are, generally, chosen by buyers to be a status symbol, rather than “inexpensive.” Ford, then, cannot compete on price alone, as Chinese automakers like Chery and Geely — which have sizeable lineups of entry-level models — will always be able to undercut them. As a result, it is important for foreign car makers to not just build their brand in China, but to build a strong brand in China, one that speaks to Chinese consumers in a way that domestically-produced autos cannot. To break it down further, foreign automakers need to build a strong, distinctive brand — a German car must fit Chinese conceptions of German cars, Japanese cars Japanese attributes and so on.
In practice, how are foreign automakers faring in their Chinese branding strategies? Today, Reuters looks into the “uphill road” these brands are traveling in China, and how they have refocused their branding strategies to varying degrees of success. Using the example of a “nouveau riche” car buyers who has traded his BMW in for an Audi — since the Audi has developed a strong reputation in China as a car for bureaucrats or (comparatively) “old money” while BMW is considered a brand for the nouveau riche (a group into which the buyer in question is loath to be grouped) — the article provides valuable insight into the particularities of a market so new that even seasoned marketers and branding execs are often at a loss to develop long-term strategies.
Posted in Automobile, Business, China, Culture
Tagged america, asia, Audi, auto, bmw, brand marketing, brand strategy, branding, buick, chery, China, chinese, east asia, europe, ford, geely, japan, japanese, korea, marketing, nouveau riche, old money, south korea, strategy
Chongqing-Based Automaker, Building On Additional Visibility Gained During Olympics, Eyes Luxury Segment
Chang'an's luxury concepts build on the CD101 platform unveiled earlier this year at the Shanghai Auto Show
Over the last year, Chinese automakers have made a big push to gain domestic popularity and international pathways for future growth, with high-visibility announcements like Sichuan Tengzhong’s acquisition of Hummer and BYD’s plans to enter the American market as soon as 2010. These Chinese automakers have done a pretty good job of selling their lower-priced models to first-time car buyers throughout the mainland — mainly 20-something middle class workers in urban centers — but what about high end models?
While several Chinese car companies have tried to appeal to this segment in the past — with Red Flag (Hongqi) immediately springing to mind, along with the newly-unveiled Geely GE — their success can be described as mixed, at best. While Red Flag remains the car of choice for China’s government elite, among high-powered businesspeople or the otherwise well-off, the luxury car market in China remains dominated by foreign brands. Even at the highest level, Red Flag doesn’t even make the list, with the Rolls-Royce Phantom, Bentley Arnage, and Maybach making up the top three favored models in China.
According to a new article in China Car Times, however, it looks like Sichuan-based Chang’an is looking to target the domestic luxury car buyer as soon as next year. Will Chang’an have better luck reaching a wider luxury audience? From the looks of the new concept photos on CCT, it looks like they are closer than ever to becoming a true rival to Audi, BMW and Mercedes in the mainland market, at least aesthetically. Now the question, as always, remains, can Chinese carmakers once and for all rid domestic consumers of the notion that foreign car brands are superior?
Posted in Automobile, Business, China, Luxury
Tagged Audi, audo, auto, automotive, bmw, BYD, car, chang'an, China, chinese, concept, luxury car, mercedes
Michael Michalsky Signs Development Deal With China’s Leading Sportswear Brand To Create China-Only Fashion Range
German designer Michael Michalsky sees China as a future fashion hub, rivaling Japan, France, and Italy
German designer Michael Michalsky, one of the country’s rising fashion stars, has recently signed a deal to produce a range of high-end sportswear, paving the way for other western designers to create China-only lines in partnership with China’s quickly-emerging domestic luxury brands. Michalsky has established himself as something of an iconoclast in European fashion, as he has set his sights primarily on the China market, rather than targeting traditional fashion centers like Milan or Paris.
As Michalsky told Deutsche Welle, his decision to focus on China’s fashion and luxury markets came naturally: “China is the most exciting market for fashion right now…The Chinese are really open to fashion, and let’s face it, the future of the world lies in this region.” Deutsche Welle’s profile of Michalsky shows a designer whose interest in the potential of the Chinese market is led as much by personal fascination as new business realities. As China’s position as one of the world’s top markets for luxury goods is heightened by falling consumption in developed countries, it seems likely that Michalsky is the first of many designers to work with Chinese luxury brands in coming years rather than an anomaly:
Posted in Business, China, Fashion, Investment, Luxury
Tagged adidas, berlin, bmw, cartier, China, Fashion, germany, gucci, jil sander, louis vuitton, Luxury, michael michalsky, uniqlo
Brands Spending Heavily On Advertising, Brand Messaging To Maintain Strong Growth In Competitive Developing Markets
The Luxury Institute's results seem to indicate that luxury brands with a strong foothold in China will need to work harder to maintain their dominance
This week, the Luxury Institute published its list of the top luxury brands in China, as ranked by Chinese high-net-worth consumers. While the results are not terribly surprising — as the “Best of the Best” probably don’t differ dramatically from any other major luxury market — it is still important to see that traditional favorites like Louis Vuitton (for women) and Dunhill (for men) have slipped a bit. This (to me, at least) gives an indication that brands which have developed strong footholds in the Chinese market throughout the late ’80s and ’90s are giving luxury shoppers in China a bit of “luxury fatigue.”
Possibly driven by younger luxury shoppers in the cosmopolitan east (where consumers are generally more trendy as well as picky), the split between brand lust in first- and second-tier cities must be growing nearly as fast as the advertising expenditures. Unfortunately, the Luxury Institute’s results do not break the survey down into regional variations, so I’m basing all of this on my own observations and opinions.
Posted in Automobile, Business, China, Culture, Fashion, Luxury
Tagged armani, asia, bmw, China, ferragamo, gucci, hermes, Luxury, mercedes, paul smith, porsche, prada
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)
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:
Posted in Automobile, Business, China, Economy, Investment, Luxury
Tagged Audi, automobiles, bmw, cars, China, germany, Luxury, mercedes, volvo