Competition heats up in China's luxury car market

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Last updated at: (Beijing Time) Thursday, October 16, 2003

Competition heats up in China's luxury car market

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German-based auto giant BMW will soon see its Series 3 sedans roll off the production line in northeast China's Liaoning Province, making it the second foreign luxury auto maker in China following Volkswagen's Audi.

The BMW3, with a possible price of around 400,000 yuan (48,000 US dollars), will be introduced to the Chinese market in a week. Under the agreement signed by BMW and Brilliance China Automotive,the BMW5 is also being produced locally.

In 2001, imported BMW sales stood at 5,742 on the Chinese mainland and in Hong Kong, while in the first half this year, 5,917 BMWs had already been sold. China has become BMW's second largest market in Asia after Japan.

BMW plans to sell one million sedans on the mainland in the next 10 years, 75 to 80 percent of which will be produced in China.Experts believe BMW's ambitious expansion will trigger a new roundof limousine competition in China.

Audi has, to date, had a monopoly on luxury car production in China, but now it is preparing for the increasingly heated competition with the local production of A4s this year. It began to import its A8 series to China to challenge the imported limousine market domination by Mercedes-Benz and BMW.

Besides Audi and BMW, Japan's Toyota Motor Corporation plans toinvest 311 million US dollars to produce its luxury "Crown" model in China. The production of the "Crown" will Toyota's first luxurycar production outside Japan.

Daimler-Chrysler also announced plans to build a factory in thecountry for Mercedes-Benz production. It has signed a one-billion-euro framework agreement with Beijing Automotive Industry Holding Co. Ltd. to make Mercedes luxury cars and trucks in China. The deal aims for the production of 25,000 luxury cars every year.

Andreas Deges, executive director of Audi China under the VW (China) Investment Co., Ltd., said the Chinese market was maturing as market divisions became increasingly clearer. The newly prosperous social class in China wanted to demonstrate their success, offering an enormous potential market for luxury cars.

Ten years ago, most luxury cars were owned by government organizations or enterprises, but now more individuals are beginning to buy limousines.

With over 20 years of reform and opening-up, China has created numerous millionaires and some billionaires. Last year at an auto show in Beijing, a Bentley was sold to an anonymous Chinese buyer for 8.88 million yuan (1.07 million US dollars).

Official statistics show over 10 million cars are privately owned in China. As living standards improve, they become more selective in purchasing cars. In the capital, many leading limousine brands can be seen, many of which are privately owned.

With the dramatically increasing number of wealthy Chinese, overseas auto giants are optimistic about the prospects of the Chinese market. They will make efforts to increase exports to China and expand local production of new models, experts say.

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