China's Luxury Car Market Sees Growing Competition

As the competition in China's compact car market is growing fiercer, a battle between various luxury cars is also going on.

Pan Zushun, general manager of the China Imported Automobile Trading Center, said that in the first half of 2001, the number of China's imported cars doubled that for the corresponding period of last year, with the number of luxury cars increasing by a big margin.

"As higher tariff rates was imposed on Japanese cars in the second half of last year, German and U.S. cars will become more popular in China," he said.

The rapid growth in China's economy and the improvement of the people's living standards have created the necessary conditions for an emerging luxury cars market. Foreign automakers are expecting more Chinese consumers to buy luxury cars since the country encourages individuals to own cars, market observers say.

It is estimated that China now has a group of more than one million rich people each earning over 150,000 yuan (18,000 U.S. dollars) per year.

Pan said in the past three years, people from this group bought cars priced at more than 400,000 yuan (48,000 U.S. dollars), which has boosted the rapid growth of the country's luxury car market.

Kenneth Hsu, vice-president of the Ford Motor Company (China), said in this populous nation, luxury car owners have gradually changed from businesses to individuals in major cities. His company will open showrooms around the end of this year to meet the market demand.

So far this year, Ford Motor (China)'s sales volume has jumped by 200 percent on an annual basis, with luxury cars making a major contribution.

World-known brands such as Volvo, Lincoln and Jaguar also witnessed surges in sales in the Chinese market.

France's Citroen C5 is expected to enter China's market in a month's time. Market observers anticipate that the C5, costing over 400,000 yuan, will achieve satisfactory sales in China.

Luxury BMW cars performed well in China last year, and the German company plans to set up 35 sales and service agencies in Chinese cities this year to reinforce its service network.

Mercedes-Benz also plans to increase its China maintenance centers from the current 23 to 30 before the end of this year, and will try to provide after-sale service to Chinese clients according to international standards.

Sweden's Volvo has set up a network of 12 maintenance centers and about 20 sales outlets in China, and expects to have more in the western areas of the country.

As China is to join the World Trade Organization soon, luxury car manufacturers are all busy seeking better cooperation opportunities in China.

BMW is at the final stage for launching a joint-venture project with China and is expected to become the first foreign company that builds luxury cars in the country.






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