China: 80 Billion RMB to be spent on imported luxury cars

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After two years of rapid growth and expansion, the Chinese car market is calming down. According to the statistics released by National Passenger Car Information Exchange Associationin 7th November, the sales volume of Chinese car is 1,216,500, which is a decrease of 7.6% on a month-on-month basis, and increased 1% compared with the same period of last year.

In the mean time, market differentiation is growing more apparent. The local brands are coming into a time of weak growth, while foreign brands, especially luxury brands are occupying more market shares.

Some insiders point out that there are reasons for this phenomenon. Like, the number of new rich is rising rapidly; customers in China love to buy the luxury; the price of entry-level luxury car is getting lower and lower, it is worth noticing that the luxury car is favored by official vehicle.

A report of Nanfang.net claimed that the money used to buy official vehicles climbed to 8 billion RMB in 2011, accounting for 14% of the government purchasing. The average annual increasing rate is more than 1 billion. What is more, excessive purchasing is far from rare. For example, it is reported that Ningxia department of finance has bought 25 Audi A6 costing 9 million RMB, which has aroused a hot debate nationwide.

Looking specifically, the imported brands, such as Audi BMW and Mercedes Benz are the overwhelmingly major players in the luxury car market.

According to the news from xinhuanet.com, the newly released Automobile industry Restructuring and Revitalization Plan the shows clearly that official vehicle needs to give priority to national brands. From the year of 2009, the national brands of newly Official Vehicle should accounts more than 50%.

However, despite that, national brands still standing in the backyards. What brings the situation? From a survey holding by a website, 68.6% of participants believe “Officials enjoy flamboyance”, only 14.3% thought “there are no high-end market models for national brands.”

In other parts of the world, driving and sitting in national brand is commonplace. In South Korea and Japan, official vehicle are all national brands. The cars of Japan emperor, Prime Minister and Ministers are all provided by Toyota and Nissan. In Russia, officials using imported sedan are considering “detrimental to the state”; In India, officials of any level have to use national brand cars; In Germany, although there is no such regulations to protect national brands, but it is written in the law that the car produced outside the EU are not allowed.

Cheng Yuanbo, the director of ce.cn once said on his blog that, it is more important to offer marketing resource than money supply to support national brand. Only if the “respectable” people use national brands to make it a respectable behavior, can those brands start to win the market share.
What is the effect if official vehicle are all using national brands? A survey from hexun.com shows that 47.4% of participates demonstrate that if it happens, there will be more reasons to buy national brands. And 23.7% of them claimed it will boast the confidence to national brands.

To implement national brands procurement, how should us do? Another survey from Hexun.com shows that 36.2% of participants believe we should focus on “regulations” and 29.8% thought it is “responsibility towards the nation”, 27.2% chose “supervision”, 4.3% “public supervision”.