We’ve posted many times about the masses of luxury cars in China. There was once a time when a top of the line BMW 7-series would turn our heads, not in China though, as its an every day run around for and all too common now, the same with the Audi Q7 - it looked great, until we saw half a dozen in one day. Hummers? How passée, we must see a 100 a week! Ferrari’s? There must be more Ferrari’s in China than there is the whole of Italy!
Forbes.com has rehashed some old news again for us, ‘Chinas Luxury Car Lust’, click continue reading…
LONDON - China may be traditionally known for lapping up low-cost, mass-market cars, but its wealthier drivers also have an appetite for the high life.
Luxury German car-maker Audi said on Tuesday it had sold 101,996 vehicles in China over 2007, breaking the 100,000 barrier for the first time and marking a 25% increase in sales year-on-year. The manufacturer is a subsidiary of German firm Volkswagen (other-otc: VLKAY - news - people ), the first foreign car-maker to set up shop in China in 1984.
Shares in Audi ticked up 72 euro cents ($1.05), or 0.1%, to 616.20 euros ($906.54), in Munich. Parent company Volkswagen also nudged up 0.1% to 149.05 euros ($219.28), failing to overturn the negative market sentiment surrounding the sector, which is weighed down by fears of a recession in the United States. (See “European Autos Hit By U.S. Economy Fears”)
According to Nomura International analyst Michael Tyndall, Audi’s 25% Chinese growth rate seems in-line with the growth of the luxury car market as a whole. The German firm is nonetheless leaving rivals Bayerische Motoren Worke (other-otc: BAMXF - news - people ) and Daimler (nyse: DAI - news - people ) in the dust, thanks to Volkswagen’s historically dominant position in China.
“What we are seeing here is what you would expect,” said Stephen Cheetham, analyst with Sanford Bernstein. He cited the emergence of a viable middle class in China as the main reason, along with the country’s rapid industrialization and foreign car-makers’ well-established production facilities.
According to China’s national statistics bureau, the average wage of urban workers rose 18.8% in the first three quarters of 2007. The average salary now stands at 16,675 yuan ($2,295.16), which may not be so impressive given that an Audi sports utility vehicle costs about 250,000 yuan ($34,410.14). But out of a population of 1.3 billion, some 100,000 Chinese still have the cash for high-end wheels.
“This makes China the biggest export market for Audi,” said Ralph Weyler, a member of Audi’s sales and marketing board. “And we expect further increases in sales figures for 2008.”
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