Germany Does Well In China

BMW announced surprising third-quarter profits which has been attributed to strong sales in China. In fact, all German luxury brands are doing well in the country. Audi seems to be first and attracts the older, government official crowd while BMW is capturing the hearts of young people in the country.

BMW, Audi and Mercedes-Benz have been heavily investing in the Chinese market. To avoid import taxes, the have built their own factories within the country. The three have also designed specific models for the Chinese market. Apparently, Chinese businesspeople like to be chauffeured around and have been demanding cars with more legroom in the back. Special versions of cars like the 5 series and E class have been lengthened for more room in the back. These only-to-China models look slightly odd with their rear doors considerably longer than the forward doors. This type of lengthening is known as “long wheelbase” within the industry.

However, the German luxury giants have a long way to go to win the Chinese market. So far this year BMW sold 102,916 units in China but sold 176,736 units in the US. Don’t forget that the US is still in bad economic times and has a lot more luxury options than in the Chinese market. While sales in China are not bad for these luxury cars, I don’t think they should be an indicator in the Chinese market. I would place my bet on mainstream cars selling the best in China. China’s wealthy may be buying a few 5 series but the real money is to be made with the growing middle class. The people who are moving up from a motorbike or even a bicycle to a car are the consumers guiding the industry.


http://blogs.wsj.com/scene/2010/11/03/bmw-in-china-its-paid-in-full-in-cash/

http://www.bloomberg.com/news/2010-11-03/toyota-s-lexus-widens-u-s-luxury-sales-lead-over-mercedes-bmw.html