Following The Lead Of European Luxury Brands, Automakers Will Increasingly Look Inland In Coming Years
Over the past year, Jing Daily has kept a close eye on the trend of major luxury brands moving beyond the top-tier cities in which they built their initial China footholds and into second- and third-tier cities, where luxury fatigue has yet to set in and potential buyers are less likely to jet off to Hong Kong or Europe to do their high-end shopping. Following the lead of luxury brands like Louis Vuitton and others, luxury automakers too are looking to inland China for long-term growth, as China Car Times writes today.
While we’ve seen the occasional news item about coal bosses in rural China ripping around town in flashy Hummers or spending millions on supercar-filled weddings, these isolated cases don’t reflect the real opportunity that automakers like BMW, Mercedes, and even Buick have in younger inland markets.
From China Car Times:
The consultancy firm Mckinsey indicated that 30% of China’s rich life in Beijing, Shanghai, Shenzhen and Guangzhou, but by 2015 75% of China’s wealthy will be living in second and third tier cities along China’s east coast.
In a survey of China’s wealthy over 40% indicated that they planned to buy a luxury car, the first time it has jumped over the choice of buying a luxury home (which stood at 38%) whilst clothes, diamonds and art stood at 9%, private planes at 4% and luxury travel stood at 1% and other items stood at 8%
Bentley recently opened its 10th sales center in Yunnan province, and is a stark difference to its original dealership in the year 2000 when it only had one single dealership and a sales goal of 30 vehicles. Fast forward to 2009 and Bentley cleared 421 cars from its dealership forecourts. However first tier cities are still expected to be strong sales points, and in 2011 Bentley is aiming to sell 1000 cars in China and will open dealerships in fast developing cities, specifically Xiamen, Shenyang, and Tianjin etc.
In 2009, Lamborghini sold 80 vehicles in China, which was an increase of 11% over 2008 sales and is likely to achieve its sales goal of 100 vehicles in 2010 without much difficulty. Lamborghini currently has seven dealerships in China and will open its 8th dealership in Chongqing the first in China’s west and also plans to open dealerships in Qingdao and Dalian.
Rolls Royce is the big winner in China, with it selling 678 vehicles between January and April 2010, an increase of over 146% over 2009 sales, but whilst its sales network is smaller than Bentley’s, it has chosen its network locations carefully and only in fast developing cities such as Shenzhen, Chengdu and Hangzhou, where the number of wealthy consumers is quite high.
Following the development of China’s second and third tier cities, luxury car makers will adopt their tactics and take the focus away from big cities such as Beijing and Shanghai where the market for super cars and luxury models is already beginning to saturate, the new focus is going to be on Chengdu, Harbin, Dalian, Chongqing, Xi’an, Wuxi, Wenzhou, Qingdao and other second tier cities.