China Luxury Carmakers are Doing Efforts

In the industry of car making every maker is trying to give something new . For the purpose China is also trying its hard. Luxury cars are normally very expensive, but car makers must think to provide luxury even with a cheaper price. Makers of luxury autos are finding the mother lode in booming Asian markets, especially mainland China.

"The growth in China is unbelievable," said Ian Robertson, chairman and CEO of Rolls-Royce Motor Cars Ltd., which belongs to Germany's BMW

"Every time I go there—and I go there more and more—I discover new markets, big cities away from the coast, with millions of people. They would be in the first rank in other countries, and most Westerners have never heard of them," he said in an interview last month. For example, Rolls-Royce is adding its fifth showroom in China, out of only 80 worldwide, in the booming city of Chengdu, in central China.

J.D. Power & Associates expects sales for the entire Chinese market, including nonluxury brands, roughly to double in less than a decade, from about 8 million in 2007 to 16.1 million in 2014. Power forecasts luxury auto sales in China will more than double by 2014, to around 508,000. Demand for luxury cars is also growing in India, but from a much lower base, Power said. The company estimated combined sales for Audi, BMW, Mercedes-Benz, and a handful of other luxury brands in India were 3,598 in 2007, almost double 2006. (Like BusinessWeek, J.D. Power is a division of The McGraw-Hill Companies.)

In contrast, total luxury-brand sales in China were about 205,000 units in 2007, up 29% from 2006, according to the research and consulting firm based in Westlake Village, Calif.

Buick

That luxury-brand total in China doesn't include Buick, even though consumers in China consider it a luxury brand. Buick is in decline in the U.S., but it is General Motors' (GM) best-selling brand in China, bigger even than Chevrolet.

Buick sales in China were 332,115 units in 2007, up 9% from 2006. Buick's U.S. sales were 185,791 in 2007, down 23%, according to AutoData, based in Woodcliff Lake, N.J. Buick's Chinese lineup includes the posh Buick Park Avenue, which is exclusive to China and considered big enough and prestigious enough there to be driven by a chauffeur. Parent GM Shanghai was the first foreign joint-venture automaker in China to sell more than 1 million units in a year, in 2007.

Are German luxury brands Dominating ?

Many brands are doing their best but European import brands, especially the German luxury brands, dominate the high end of the market. It may be difficult to achieve high ends. For instance, Audi (NSUG) sold more cars in China than in the U.S. for the first time last year. Audi has been in the China market longer than most other brands and produces locally most of the cars it sells in China. That includes the long-wheelbase A6L, another model that is exclusive to China.

Those factors gave Audi a dominating share of nearly 50% of luxury-brand sales in China in 2007, according to Power, but the competition is heating up. BMW, Bentley, Cadillac, Ferrari, Lexus, Mercedes-Benz (DAI), Porsche (PSHG), Saab, Volkswagen (VLKAY), Volvo, and other imports are also part of the growing luxury boom.

The WTO and China

The rush in China has been on ever since the People's Republic of China joined the World Trade Organization at the end of 2001. The growth in auto sales also accelerated when the Chinese government lowered the required capital investment for new startups at the end of 2004, according to Wendy Cai, director at Chinese Services Group for Deloitte in New York. That made it much more economical to establish new-car franchises, she said. Now we have to see that how the car makers of the world shall overcome these difficulties in future.