Samuel Shen and Kazunori Takada Guangzhou, China
DAIMLER will give its new luxury baby, the Mercedes-Maybach limousine, a glitzy world debut at this week’s Guangzhou auto show, even as analysts warn the end is nigh for China’s 10-year high-end car sales boom.
The scale of the world’s biggest auto market means the German firm and peers like Jaguar Land Rover cannot ignore it. To cut costs and cushion potential discounts as luxury demand cools, they are starting or expanding production in China.
Responding quickly to changing consumer preferences since President Xi Jinping’s anti-extravagance campaign began two years ago is key for luxury car makers. IHS Automotive expects premium car sales growth will slow to 5 percent by 2018 from an average annual growth rate of 30 percent over the past decade.
“We want to go for a sustainable growth, growth with quality. It’s not just a volume game,” Ralf Speth, the chief executive of Jaguar Land Rover, said last month in Changshu, where the British company opened its first overseas plant.
Localising operations could help luxury operators target fast responses to changing trends. It could also help them avoid heavy import duties and price their cars more competitively.
Interest among foreign firms in selling upscale cars in China shows no sign of abating even as economic growth slows to the weakest pace since first-quarter 2009. Last month, Ford launched its premium Lincoln brand, while Volkswagen plans to introduce luxury cars next year.
But the market for ultra-luxury cars, defined by consultancy as those selling for more than 2 million yuan (R3.6m) apiece, has dropped sharply.
AT Kearney’s Andreas Graef said downsizing was spreading to the ultra-luxury segment. – Reuters