In lane for luxury

By Li Jian

Shanghai Star. 2005-04-28

HOW long does it take a 10 million yuan (US$1.2 million) Rolls-Royce sedan to find an owner in Shanghai? Four hours.

A Shanghainese bought the limousine just that length of time after the opening of the 2005 Auto Shanghai exhibition, the largest in Asia.

A few hours later, another visitor to the auto show bought a Cadillac sedan at the reception desk.

Each of the halls was crowded with thousands of people who were elbowing each other for a glimpse of the fastest and most expensive machines. The officials of Porsche, for instance, were stunned by the crowd rushing to ask questions about their new Porch 911 Carrera.

Most of the high-end luxury cars on show found buyers here, according to Shanghai's Oriental Morning Post.

Although most of those attending earned the equivalent of a few hundred US dollars a month, their dreams of owning big, fast and luxurious driving machines would not be repressed.

"China is gearing up to be a giant market for economy and middle-class cars, but also for high-end car consumers," said Wang Hu, an economist from the Shanghai Academy of Social Sciences.

High-end vehicle makers, suffering a slowdown in sales in the European and North American markets, have turned to China for customers.

"I am confident about China's auto market," said Steven White, senior vice-president of Nissan Motors Co Ltd. "You cannot imagine the size of the market and its potential."

Sports cars

Nissan brought its luxury Fuga, a powerful new premium sedan and its Quest MPV, a sport concept car first shown at the New York Auto Show. The two models will be on sale in China in June and autumn respectively.

Nissan's Fuga was an interesting surprise, but the real stars of the auto show were Ferrari, Porsche, Lamborghini and other luxury vehicles.

Ferrari SpA, the Italy-based sports car maker, debuted its latest model, the F430, priced at 2.6 million yuan (US$314,000).

"China has huge potential in the top-class automotive segment. We believe it will be the No. 5 or No. 6 market for Ferrari in the next two or three years," said Antonio Ghini, Ferrari brand manager.

The Italian sports car company, which is familiar to Chinese customers for its Ferrari Formula One team, sold 42 vehicles on the Chinese mainland last year, almost half of its sales since entering the market in 1993. To compete with other arrivals such as Lamborghini and Porsche, Ferrari has sped up its China expansion by setting up seven specialty showrooms in major cities.

Porsche, showing off six powerful models, including the 2006 911 GT3 Cup and the Porsche 911 Carrera coupe, used Auto Shanghai as its first opportunity to show off its cars at an exhibition in China.

"We have many 'first times' here," said Mark Bishop, previously managing director of Porsche Middle East in Dubai and Jebsen Motor International Trade in Shanghai. "It is the first time we have held an auto show in China. It is the first time we have shown off our 911 Carrerra to the public and the first time we have revealed our 911 Carrera Cup in Asia. Auto Shanghai is an important stage on which to promote our brand in China."

The German-based car maker aims to sell more than 1,000 cars in China this year, compared with about 390 in 2004.

Dutch sports car maker Spyker also made its first debut at this China auto show, unveiling its C12 LaTurbie and Le Mans 2005.

Symbol of success

Whether Toyota's Executive Vice-President Akio Toyota's prediction that China will bypass the United States to be the world's number one high-end car market is accurate is anyone's guess. The question is, how many people can afford such luxury cars?

But the rising number of orders for Toyota's model Crown have proved something. Toyota has so far received 4,000 orders for the car, which is in its 12th generation, said Fujio Cho from Toyota.

"We hope that we can lead the growing high-end market in China with the Crown," Cho said.

Toyota isn't the only auto maker with ambitions to dominate the high-end car market on the mainland. BMW and Mercedes-Benz are already there. Like those high-end auto makers, Cadillac is also confident enough in local manufacturing to assemble vehicles there.

"There is no doubt that China is creating a large number of rich people, among them are property developers, manufacturers, high-tech moguls, and senior managing directors," said Wang, the economist. "For them, high-end cars are part of their identity and a symbol of power and success."

Government demand for official vehicles also provides a big market for high-end cars.

"If the government would ease up the limits on government-use cars, that will further help stimulate the high-end market," said Wang. "But officials worry their luxury cars will be associated with corruption."

"In the past, successful businessmen, such as the famed Anhui and Shanxi merchants of the Ming (1368-1644) and Qing (1644-1911) dynasties, liked to build themselves big houses. Nowadays, they turn to big luxury cars and other high-end products,"said Wang Weihai, a sociologist from Fudan University.

Mercedes-Benz will introduce its new R-, M- and CLK-Class vehicles to China over the course of the coming months. The B-Class will first be offered to selected markets in Asia.

"Starting here at Auto Shanghai 2005, we will monitor the Chinese public's interest in our Compact Sports Tourer. If the consumer and media reactions are positive we can certainly imagine offering the B-Class in China in due time," explained one official from Mercedes-Benz.

"For BMW, China is already among the top 10 markets in the world and it will be among the top five markets within the next decade," said BMW Chairman Helmut Panke.

There is bad news too. A new tax will be added to the consumption of high-end cars. This is currently being formulated by China's Ministry of Finance and is expected to cool the market a little.

"Big, luxurious and powerful as they are, high-end driving machines consume more fuel than more economical cars," said Wang Hu. "The new tax is expected to cut the demand for these fuel-consuming machines, to help alleviate the tight energy situation."

Copyright by Shanghai Star.