February 14, 2013

Ultra-Luxury Auto Sales In China Surprisingly Robust, But Are They Sustainable?

China Could Become Bentley’s Largest Market In 2013

Bentley's EXP 9 F all-wheel drive luxury Sport Utility Vehicle concept debuted in China

Given the current “wait-and-see” attitude that many wealthy Chinese are taking towards flashy luxury purchases at the moment, it’s perhaps surprising that the country’s ultra-high-end auto market remains so strong. In the first three quarters of 2012, British marque Bentley saw sales jump 26 percent in China, ultimately selling 2,253 units throughout the year, a 23 percent increase year-on-year. Contrary to concerns that China’s ultra-luxury auto market would falter in the run-up to Beijing’s decennial leadership transition, Bentley sold 728 cars in China in the last three months of 2012, with the country’s wealthy continuing to favor its Mulsanne and Flying Spur. China’s interest in larger models, and the Diamond Jubilee special edition Mulsanne in particular, meant that four out of every ten Mulsannes built in Crewe, England were sold in China last year.

Sustained growth in China — despite the “luxury as a four-letter word” atmosphere seen in the last half of 2012 — put the country closely behind Bentley’s top market, the United States, with the automaker selling only 204 more units in the US than China. This performance has given the company reason to be confident that China will finally become its top market in 2013. As rep Nigel Lofkin told China Daily this week, “You could never imagine how important the China market is to Bentley,” adding, “in my heart, China is the most important market for Bentley now and in the future.” China’s importance to Bentley was clearly on display last year, as the automaker turned to Weibo to tailor its EXP 9 F SUV concept — seen at the 2012 Beijing Auto Show — to Chinese tastes.

Yet Bentley is far from the only ultra-luxury automaker hoping to keep cashing in on Chinese demand, particularly in inland areas that boast attractive “pockets of wealth.” Volkswagen-owned French marque Bugatti — which sold a record six cars in China last year, including a one-off “Wei Long” Veyron Grand Sport — hopes to expand its China network from its current two dealerships (in Beijing and Hong Kong) to 15 by 2015. Not to be outdone by Audi’s China-only,US$421,925 R8 coupe, Swedish hypercar manufacturer Koenigsegg also hopes to tickle the fancy of the Chinese buyer with its One:1 concept. To be limited to only five cars, priced at an estimated $2 million, the One:1 is named after the car’s jaw-dropping one horsepower per kilogram. (Which would make it one of the world’s fastest cars.)

Having seen China account for around 30 percent of its global sales last year, Rolls-Royce recently said that the country has surpassed the US to become its largest single market. In an attempt to maintain its momentum in 2013, the British automaker plans to continue its expansion efforts, particularly in second-tier cities and the comparatively untapped west of the country, building on its current 15 dealerships in mainland China.

Despite official optimism, the softer sales growth seen for some brands in 2012 means the Chinese ultra-luxury auto industry is far from an easy place to be. This was particularly true last year for flashy Italian brands Lamborghini and Ferrari. Though the former sold 320 cars to Chinese buyers in 2012 — up from 206 in 2010 and 80 in 2009 — Lamborghini GM Christian Mastro admitted that sales growth last year “was a little quiet from the boom in past years.” Marred by a poorly conceived publicity stunt that backfired in spectacular fashion, and a scandal that reached the upper echelons of the Chinese government, 2012 was a mixed year for Ferrari.

While sales remained stronger than some would have expected, given slower economic growth in China last year, Ferrari — like every ultra-luxury automaker — certainly understands that its product is vulnerable to shifting consumer demand and luxury crackdowns that can appear in China at the drop of a hat. As Lamborghini head Stephan Winkelmann put it last year, “We have a very volatile product…Our customers buy this product not because they need mobility, but because they want a dream fulfilled. So if it’s not the right time — even if they have the money — they might not buy it.”

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Tag: auto consumption, auto market, bentley, china... , More
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