Global automakers are scrambling to meet the demands of China’s young urban professionals, who want a car that makes them stand out, yet don’t always have the money to splurge on a top-end model.
After nearly two decades of frenzied growth driven mainly by the very wealthy, China’s auto market is maturing, yet remains ferociously competitive.
People like Zhou Wenxi, a 32-year-old Shanghai cram-school owner, and Guo Yetao, 23, a software salesman from Hangzhou, are fuelling two trends: hot demand for smaller crossover sport utility vehicles like Ford Motor Co‘s EcoSport; and more interest in affordable, entry-level luxury cars like the Audi A3.
There is a potential “seismic shift” in the influence these young urban professionals will have on China’s auto market, says Yale Zhang, head of Automotive Foresight, a Shanghai-based consultant.
Manufacturers will show off several more affordable, entry-level luxury cars at the Beijing show.
A crucial shift for them will be to produce more of these models in China, which would cut the price as they would not be subject to hefty import duty and other taxes.
Volume sales in this premium compact car sector have trebled to more than 52,000 in the past four years, according to IHS data, so remain, for now, a tiny niche in China’s total passenger car market of close to 16.8 million.
Some global luxury brands, such as Nissan Motor Co Ltd‘s Infiniti, Honda Motor Co Ltd‘s Acura and General Motors Co‘s Cadillac, have been late to enter China, and now see its potential as a 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, says market research firm TNS.
Read more at The Star.