Foreign automakers are attracting anger from government officials and media in China over steep markups on luxury cars.
But the critics miss a key point. China’s economy is healthy enough to support the buying.
“A vehicle is often a personal statement about one’s wealth and place in the social hierarchy, so many consumers are willing to pay extra to make an impact statement about themselves,” Tim Dunne, director of global automotive operations at marketing-consulting firm JD Power and Associates, said in an interview.
The issue came to a head recently when China’s Ministry of Commerce said it would move to change rules governing vehicle sales in the world’s largest auto market. The announcement capped off a string of news reports casting Audi, BMW and other offshore automakers as the villains in a scenario of jacked-up prices and bad feelings between dealers and automakers.
The government could move to limit auto makers’ power to demand a deposit from dealers, the ministry said, to give local dealers more freedom over the vehicles they sell.
But would such a move be appropriate? It’s worth noting that so far, one of the loudest critics of high prices on foreign luxury vehicles has been the China Automobile Dealers Association. Luo Lei, the group’s deputy secretary, told China Daily last month that his organization would investigate the “unreasonable pricing and excessive profits” of some foreign car brands in China, amid price-fixing investigations on a range of foreign products and sectors.
China Car Times is the number one portal for the latest information, statistics, and industry information on the Chinese automotive industry. Over the past six years of operation we have seen the Chinese auto market grow from a backwater of old European models to the world's largest auto market with the world's leading technology being delivered here first. You can connect with China Car Times founder and Editor Ash Sutcliffe by clicking on the Linkedin logo, you can also follow us on Twitter, Facebook and Google Plus via the relevant icons