Carmakers Eye China
November 21, 2006
At the Auto China 2006 motor show in Beijing, the world's top luxury carmakers, including DaimlerChrysler, Porsche, Audi, Lamborghini, Rolls Royce, have been targeting a rapidly growing generation of Chinese tycoons who enjoy flaunting their wealth.
Luxury German sports car maker Porsche, which entered China in 2001, sold 857 cars in China last year and said it expected that figure to double in 2006.
"There is lot of peer pressure here... you've got to have this, you've got to have that... by positioning our brand, we're attracting a lot of business that way," said Mark Bishop, managing director of Porsche China.
Large potential market for luxury models
The growing number of potential luxury car owners also makes China a lucrative market for European carmakers.
"We have over 300,000 millionaires in China, so I think it's a good number for us to go into the market," Stephan Winkelmann, president and chief executive officer of Italian luxury sports car maker Lamborghini, said in an interview with the AFP news agency.
With hefty price tags ranging from $377,215 to $554,430 (293,793 euros to 431,816 euros), Lamborghini has only sold 25 cars since it went on the Chinese market two years ago, but Winkelmann said the company expected to sell 30 each year in the near future.
"This market is going to explode in terms of high luxury and super sports cars so I think in years to come, there is a big potential in volume," he added
The 10-day Auto China 2006, which kicked off on Sunday, will display products from 1,500 manufacturers from 20 countries, with German automakers featured prominently.
German automakers featured prominently
Audi, Volkswagen's luxury flagship, took center stage, unveiling an oversized sculpture of its newest model, the TT Coupe, at an opening ceremony in front of the Grand Hyatt Hotel, located near Tiananmen Square. The sculpture was part of the "Land of Ideas" campaign that was launched earlier this year by German President Horst Köhler for the soccer World Cup, which Germany hosted over the summer.
Volkswagen, which operates a joint venture plant in Shanghai with China's First Auto Works, currently has 17.5 percent of the Chinese market share and is launching four new models designed for the Chinese market based on VW's popular Passat station wagon and a hatchback version of the Golf (also known as the Rabbit) compact, among others.
Both Volkswagen and DaimlerChrysler have also announced plans to expand their operations in China. A spokesman for Volkswagen said he expected the Wolfsburg-based auto giant to exceed its sales goal of 600,000 cars in China this year, owing to the success of its Chinese Jetta Sagitar model.
Joint ventures for Volkswagen and DaimlerChrysler
DaimlerChrysler, meanwhile, is in talks with China's Chery Automobile Co. to produce a sub-compact car for the Dodge brand, which executives said could bring low-cost Chinese exports to the US market. Chairman Dieter Zetsche, who was in China for the fair, told reporters that he hoped to reach a deal with Chery by the end of the year.
China's passenger car sales have been growing strongly, at 26.4 percent in the first nine months of the year, as demand from a burgeoning more affluent class increases. The distribution of wealth in the developing country though is extremely skewed, with nearly 200 million inhabitants living below the World Bank's poverty line of $1 per person per day.