Luxury carmakers cashing in on China
Updated: 2011-06-17 11:13
By Patrick Whiteley and Wang Chao (China Daily European Weekly)
Luxury carmakers are cashing in on the purchasing spree of China's young millionaires
In the lead-up to the Shanghai Auto Show in April, the British car manufacturer released five models in the China market but aspiring James Bond types had to be quick on the draw. All cars were sold much before the show opened. The sales coup was extraordinary, considering that many auto magazines in 2010 estimated its price to be about 1.2 million euros, a quarter of the amount it fetched in China.
How did Aston Martin get away with asking so much? Because it knew there were thousands of super rich Chinese men, willing to pay whatever it took to become one of the exclusive few.
China's annual economic expansion of 9.7 percent, rising property prices and a strengthening yuan have combined to create a new breed of big spenders. They are mostly male, they are 30-something, and they derive great delight from driving ridiculously expensive cars and showing off their success. They have the desire and cash to live out their 007 fantasies.
"Modesty is not a prominent Chinese characteristic but confidence is, whether founded or unfounded," says Jenny Gu from JD Power and Associates. "They are not shy about displaying their success with a propensity to show off their success through brand name processions."
Although overall car sales in China have slowed in 2011 to below double digits compared to the dynamic 20 to 30 percent growth of previous years, the luxury segment is soaring to new heights. Consultants Bain & Co estimate deliveries of high-end cars may rise 35 percent this year in the world's fastest-growing economy compared to global sales growth of 10 percent.
The driving force behind the luxury car boom is the dramatic rise of young Chinese millionaires who are valued at more than 10 million yuan (1.2 million euros). According to the Boston Consulting Group, last year there were more than 1.1 million of them, a 31 percent rise compared to the previous year, and among this group were also 60,000 people with personal assets of at least 100 million yuan (12 million euros).
The buying power of China's nouveau rich is expressed differently than in the West because the average Chinese millionaire is only 39 years old, about 15 years younger than their European and United States peers.
It is no surprise that Mercedes-Benz says the average owner of its flagship S-Class sedan in China is also 39 years old. Sales of the company's flagship model during the first quarter grew by 116 percent, compared with the average growth rate of 30 percent.
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