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China's SUV, Luxury Car Sales Soar

Jul 25, 2008
According to the experts, if you look at the fastest-improving market segments in China, there are two _ SUVs in China, luxury cars in China. Auto sales in China are booming, with analysts and automakers predicting growth at 15-20 per cent this year. But demand for the biggest vehicles is even higher, with sales of luxury cars and SUVs anticipated to increase by 40-45 per cent.

The phenomenon is heartening news for automakers seeing little or no progress in the United States, Europe and Japan. They also make better profits from sales of high-end vehicles than from economy models. Sales have been ballooned by economic growth that has topped 10 per cent for five straight years and an increase in real estate and stock prices that gave birth to a new crop of Chinese billionaires.

Buyers of land yachts have also been unintended beneficiaries of a government policy aimed at helping the poor. Beijing has tried to safeguard farmers and the urban poor from high oil prices by preventing pump prices for gasoline and diesel from rising further, keeping them among the world's lowest. Both foreign and Chinese automakers are utilizing the Beijing show to project SUVs in China and luxury cars in China.

According to the experts, the sales of SUVs in China and luxury cars in China of top car manufacturers climbed 42 per cent in the first quarter. Sales of R-class minivans rose 110 per cent while those of M-, G- and GL-class SUVs doubled. For some renowned car manufacturers China is perceived to be the second-biggest market for S-class sedans, behind only the US.

Leading car manufacturers are designing new models of luxury cars and SUVs with China in mind. They are attaching new features to the SUVs in China and luxury cars in China which will match the needs of the Chinese customers.

For SUVs in China, the volume is low but the growth rate is high, and those major companies still not entered into this market are all trying to get into this segment. China's auto market is ruled by smaller, low-cost models even now. But even at prices below luxury levels, drivers are showing the desire to pay for bigger wheels. Toyota Motor Corp. sold 170,000 Camry sedans in China last year, notwithstanding a price in excess of US$30,000, according to J.D. Power & Associates. That is ten times the average Chinese worker's annual income.

Beijing is trying to encourage the growth of China's auto industry and domestic sales _ but communist leaders are alarmed at pollution and rising dependence on imported oil, which they see as a strategic weakness. China is the world's No. 2 oil consumer after the US, and imports rose 12.3 per cent last year. Beijing and other major Chinese cities are among the world's smoggiest, and the surge of big engines and more horsepower is contributing to the haze.

Authorities are anticipated to try to purify the air for August's Beijing Olympics by getting half the capital's 3.3 million cars off the streets while the games is running. No final plan has been formed, but during a four-day test last summer drivers were ordered off the road on alternate days, depending on license plate numbers.

The Chinese consumer is still back on the curve of satisfying their primary requirement for transportation rather than trying to be green. But they are increasingly showing an inclination to be green, as revealed by the progress in the markets for SUVs in China and luxury cars in China.
About the Author
As one of the world's most exciting and prestigious brand, Mercedes-Benz Hong Kong offers luxury passenger cars and commercial vehicles extensive choice of Vito, Sprinter, Viano, Actros, Axor and Atego to the customers in Hong Kong and Macau.
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