China's luxury car market is on fire, literally
September 04, 2010 | Posted by Chris
When Ferrari announced earlier this week that it was recalling all 458 Italia models made this year after 5 had caught fire due to poor adhesion of internal heat shields, it revealed an anecdote of the times in the luxury car market: two of the five incendiary cars were in China, compared with one each in the US, France, Switzerland, and one other unnamed location.
The Ferrari 458 Italia costs $260,000 in the US and Europe, but in China the price is twice that -- $550,000 -- due to extra taxes. This stastic may point to the obvious, which is that China's super wealthy really like expensive cars, but it also illustrates China's shift as the focus of the global luxury car market.
Car sales in the US, for example, have been decreasing, seen in the fact the total sales for last month were less than one million vehicles. The Associated Press reports:
So therefore it's little surprise that car makers like Audi are introducing to China cars that it has no plans to sell in the US. For example, the entry level Audi A1 is set to sell in China next year, and Mercedes is introducing another luxury super car there beginning this year. Mercedes is doing great in China, according to Gasgoo Automotive News:
Chinese car pioneer Geely is also racing to increase its reach. Its recent purchase of Volvo from Ford for $1.5 billion is reported to hinge on a strategy of boosting the brand's image for luxury and personality. "Luxury future for Geely" contends one report on the carmaker's strategy, which includes getting more government officials behind the wheels of Volvos. John Zeng, director of Asia vehicle forecasting for JD Power and Associates in Shanghai, surmises the future of luxury cars this way: