China still in the driving seat as car makers cash in on a golden market

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China still in the driving seat as car makers cash in on a golden market

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Chinese economic expansion may be slowing, and pollution is increasingly a problem, but that has not dampened the enthusiasm of car makers for the country’s drivers and buyers – and the Beijing motor show is where it all comes together.

After nearly two decades of frenzied growth, China’s car market is maturing.

However it remains ferociously competitive for European and US manufacturers as well as the locals.

Foreign firms all operate in joint ventures.

Germany’s Volkswagen tops the list with 15.1 percent market share, followed by the Americans in the shape of General Motors with 14.5 percent and South Korea’s Hyundai is third at 7.6 percent.

So-called crossover sport utility vehicles are becoming more popular, but for many Chinese bigger is better as a larger vehicle shows off how successful they are.

Company manager Zhang Ping – who was checking out a Lexus LX 570 and considering buying several – explained: “In recent years, China has developed very fast, companies have also progressed very fast, and the high-end car market has developed rapidly. No matter whether it’s big groups or businesses, the bosses all like to ride in SUVs.”

China remains a major market for luxury cars, despite the economic slowdown. It is Rolls-Royce’s biggest market in terms of sales and the same for Jaguar Land Rover.

Some global luxury brands, such as Nissan’s Infiniti, Honda’s Acura and General Motors’s Cadillac, have been late to enter China, but are pushing hard to exploit its potential as a golden market for premium cars.

Five years ago, there were fewer than a dozen luxury car models sold in China under five premium brands. Today, that has mushroomed to more than 90 models offered by 25 brands, according to market research firm TNS.

Ford is planning to open eight stores selling Lincolns this year, expanding to 60 by 2016.

Infiniti is looking to improve price competitiveness with what global president Johan de Nysschen calls a “very aggressive… and rapid localisation” strategy – making locally as many as 80 percent of the 100,000 cars Infiniti aims to sell in China in the medium term.

Producing more models in China cuts prices as they are not subject to hefty import duty and other taxes.

Infiniti is also aiming to capture fast-emerging, young buyers with affordable entry-level luxury cars.

“You’ve got a big (wave) of people coming in now. They have disposable income; they are very much attuned to the premium brands,” de Nysschen said. “For us, and for other car companies, this presents a big opportunity because it’s a market force.”