International Luxury Car Brands Focus on Manufacturing Smaller Cars in China

Published By : 09 Apr 2015 | Published By : QYRESEARCH

With China’s economy slowing down, the demand for larger luxury cars has reduced significantly. The high-end car market in China grew only 22% last year, compared to the growth of 43% in 2011. According to the consultancy IHS Automotive, the growth of the high-end car market is expected to reduce further to 14% this year. Utilizing this opportunity, the high-end luxury car brands have started manufacturing small luxury vehicles in China. Luxury auto makers such as Audi A3, BMW X1 and Land Rover Evoque have already started focusing on making smaller luxury cars. Daimler AG’s Mercedes-Benz is the latest to join the group of the international luxury car brands manufacturing smaller vehicles in China. At a new plant in the outskirts of Beijing, it has started manufacturing its GLA compact sport-utility vehicle. 

Many Chinese buyers are buying the smaller luxury cars for the first time. The luxury automakers are focusing on this customer segment which might be interested to buy bigger luxury cars in future. According to Hubertus Troska, one of the members of the Board of Management of Daimler, the sales of Mercedes-Benz cars in China in the first quarter increased to 17%, outpacing the growth of the car manufacturer in the U.S. and Europe. Audi also witnessed an increase in its sales in China with 23% of its car sales from this region

According to the data released by consultancy Automotive Foresight, 1.8 million high-end cars were sold in China last year. IHS data reveals that 70% of the cars in the segment are currently manufactured in China. Chinese government is trying to promote the domestic auto industry. Local manufacturing of the smaller luxury cars allows the manufacturers to avoid import duties of 25% and sell the cars at a cheaper rate. 
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