Chinese Consumer Drives Demand for Luxury Autos

Published on Author fishman
China 1984 transport
Transport 30 years ago

The growth in Chinese demand for luxury goods is a testament to the strides China has made developmentally over the past few decades. Now containing the most millionaires in the world, the purchasing power of the Chinese Consumer will continue to be a driving economic force. Highlighted in August’s luxury, German car data, it is evident that demand has been accelerating at a rapid pace. BMW Group delivered 34,166 units to China in August, a 35% increase year-over-year according to Bloomberg. Over the past five years, the three luxury German automakers (BMW, Audi, and Mercedes) have quadrupled their local production. Projections are for China to surpass the US as the largest single market for the three car dealers by year end.

The aforementioned data is a clear reiteration of the BRIC idea conceptualized by Jim O’Neill et al. On a sheer population basis, if both relative productivity and income per capita continue to increase, the consumption of the Chinese and other “growth markets” will be phenomenal. In China specifically, the government, emphasized by Premier Li, is attempting to promote the shift away from an export-driven economy to that of a more consumption-based economy. A sign of not only development, but also of the promotion of standard of living gains for the average People’s Republic citizen. Looking forward, an increasingly consumption-oriented economy that has been realizing double digit real income growth is a combination that should continue to drive global demand and continue to make German automakers and other luxury good suppliers increasingly focused on the growing Chinese economy.


Categories F13

2 Responses to Chinese Consumer Drives Demand for Luxury Autos

  1. In Hessler’s book we’ll see the use of branded goods, including but not limited to cars, that convey status and are used to grease social and business relations. We then have a book specifically on an automotive joint venture – though my purpose is to emphasize joint ventures and management-cum-technology issues, not the car market.

    As to the BRICs, light vehicle sales in China (see a Bloomberg story) are about the same as in the US, but commercial vehicle demand is far greater. So China’s vehicle market is on track to hit 20 million units this year, the US perhaps 16 million. A challenge: back out from auto data the relative absolute size of the middle class in China and the US…

  2. I think this is especially interesting considering the relationship of the Chinese with driving illustrated in Hessler’s book. His experience driving across China was not that long ago, yet this article examines and depicts an image of a Chinese familiarity and affinity for automobiles, a concept very divergent from the stories in Hessler’s book. This suggests a question of the differences between the classes being described in each instance.