Luxury is going to the village too

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Whilst the government is eager to promote cars to the rural areas, there has been a large amount of luxury car buying in the second and third tier cities, which seems to be growing on the back of high real estate prices.

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.

Rolls Royce’s long sighted vision has made China its second biggest market and has jumped over the Japanese market. By 2008 China had over 1.6 million people with yearly incomes of over 8000USD, by 2015 this number is expected to jump to 4.4 million, whilst the number of China’s combined rich list will place China in fourth place in terms of worlds richest people.

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.