The luxury car market has defied the recession to log increases in sales worldwide from 2012. In particular, Bentley clocked a staggering 22 per cent international sales increase, and Rolls-Royce sold more than ten times the amount of cars they sold in 2003.
Why? These cars are seen as status symbols in markets where new found wealth is accumulating, and where luxury, high-end automobiles are less a source of investment and more symbols of wealth and prosperity. In the Middle East and China in particular, this affordable status is attractive among a new class of buyers: affluent urban families, who see buying cars on the same spectrum as investing in property.
Healthy taste for luxury in the Middle East
Bentley’s growth includes a staggering 44 per cent year-on-year increase in the Middle East, which goes some way to indicating just how popular these cars are among jet-setting crowds in big cities like Dubai, Oman and Beirut.
Other explanations for the marked increase in luxury car sales in the Middle East include the swelling price of oil in the past couple of years, combined with a popular trend for Emiratis to swap cars every year – like handbags!
China: exchanging the old for the new
The Middle East is not the only market where luxury cars are on the up-and-up. According to a recent report, by 2020 China’s appetite for luxury cars may well surpass the USA’s, when it’s predicted that China will sell approximately 0.7 million more luxury cars than the USA (McKinsey, 03,13).
Forecast to grow at a rate of 12 per cent per year, China’s premium car market should – unless something unexpected happens – overtake the USA to become the world’s largest premium auto seller in just 3 years.
This taste for the high life in China seems incongruous at a time when the USA and Europe are scaling back from saloons to hatchbacks and tightening their belts for what the UK Prime Minister, David Cameron, refers to as “years of austerity”. But like buyers in the Middle East, the Chinese prioritise buying a car alongside purchasing property and putting funds aside for their children’s education.
And apparently this mind set is becoming more and more common, so that while buyers overseas are trading in their coupes for Corollas, Chinese buyers are going the opposite way, shopping for BMWs, Mercedes-Benzs and Audis.
Another reason why this market is set to grow exponentially is the sheer size of it: MicKinsey points out that the affluent segment in China by 2020 will consist of 23 million affluent urban households – roughly equal to the total number of households in the UK at the moment – clustered around 300 Chinese urban centres.
They’ve got the market, time to make the car
There may be a gap in the market here to produce home-grown luxury cars to compete with Lexus and Hyundai, but this is a niche segment with products at the highest end of the quality spectrum. Whether Chinese or Middle Eastern automakers choose to focus on luxury or rather turn to SUVs, sedans or compact cars remains to be seen, but it’s clear that these markets will have strong sales potential in the coming years.