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China Luxury Car Market - Growth, Trends, and Forecast (2019 - 2024)

  • ID: 4622678
  • Report
  • Region: China
  • 89 pages
  • Mordor Intelligence
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FEATURED COMPANIES

  • BMW
  • BYD Auto
  • Dongfeng
  • Ford Motor Company
  • Geely Holding Group
  • General Motors Company
  • MORE
The China Luxury Car market is anticipated to register a CAGR of about 8.69% during the forecast period (2019 – 2024).
  • According to China Association of Automobile Manufacturers, from January 2018 – November 2018 total sales fell 1.7% from the same period a year earlier to 25.42 million vehicles, however, China’s premium car market still maintained stable growth in 2018. The luxury car market is concentrated and is being dominated by Mercedes-Benz, Audi, and BMW.
  • Irrespective of the weak market sentiment, the consumer confidence remained string and the country witnessed high demand for luxury cars in November 2018. Additionally, with the consistent rise in income and the supporting high demand for premium cars, the manufacturers of luxury vehicles reported positive sales figures from November 2018.
  • In 2018, total car units sold in the price segment of more than 300,000 yuan (USD 44,000) were approximately 1.16 million vehicles in 2018. All major manufacturers of luxury vehicles, including Mercedes-Benz, BMW, and Audi, reported positive figures in November 2018.
  • Additionally, the growth of luxury car demand among young people is also driving the growth of the market.
  • The luxury car manufacturers are currently selling Level 3 and 4 vehicles, focusing on conditional automated and highly-automated advancement, along with connected service that is being provided between smartphone and vehicle, which is further boosting the sales of luxury vehicles.
Scope of the Report

The Chinese luxury car market has been segmented by vehicle type and drive type.

Key Market Trends

Premium Automakers and Second-Tier Brands Gaining Market Traction

In 2018, the sales volume of China's luxury car market reached 2.82 million units, a year-on-year growth rate of 8%, however, the growth rate was relatively slow. In 2017, the sales volume of China's luxury car market was 2.61 million units, a year-on-year growth rate of 17%.

Currently, major premium car brands in the country like Audi, Mercedes-Benz, BMW, Jaguar Land Rover, Volvo, Lincoln, and Infiniti have already decided to cut suggested retail prices on models sold in China in response to the government's VAT drop policy for the manufacturing industry. However, it can’t be anticipated that whether the price cut will boost sales performance in the future.

In February 2019, BMW became the leading brand in the country with a monthly sales volume of 44,582 units (including the sales of Mini cars). Whereas Mercedes-Benz saw a drop in sales. Mercedes-Benz registered a year-on-year drop of 5.4% in February 2019. In February 2019, the sales of Audi A4L jumped 16.7% over the year-ago period to reach 10,888 units and the deliveries of the Audi Q2L reached 1,337 units. SAIC-GM saw its sales in February 2019 decline 38.9% from FY 2018 to 11,007 units, however, the company still held top position in teh second-tier luxury car brands.

Changing Policies and Tax Regulations

The country’s luxury car market is led by European automakers, namely, Mercedes-Benz and Audi. As per the recent report from the China Passenger Car Association, the country’s luxury sedan segment grew by ~18.8%, in the first 11 months of 2018, when compared to the same period in 2017. Additionally, the premium sport-utility segment increased by ~3.5%, between January and November, in 2018.

In terms of policy and taxation reforms, China is considering a tax cut to revive its weakened automotive market. The tax cut may aid the country in supporting its automotive sector, which was dented by the on-going trade war with the United States, as it impacted the consumers spending power. Apart from the trade war, the country’s luxury car sales have been declining, owing to slow economic growth, weak currency, and loss in the stock market.

Irrespective of the aforementioned hindrances, the country witnessed steady growth in luxury car sales, as mentioned by Cui Dongshu, the Secretary-General of the China Passenger Car Association. To mitigate the effect of the trade war, companies, such as Mercedes-Benz, Audi, BMW, are planning to increase its China production, as the trade war is putting pressure on global luxury brands, including Mercedes-Benz, which exports US-made vehicles to China.

Additionally, luxury auto dealerships, such as Zhongzheng, China ZhengTong, and China Yongda, in order to mitigate the effects of trade wars and increase their profits, are selling non-US made cars. Additionally, luxury car manufacturers are also cutting down the prices of their vehicle models, to increase their luxury car model sales in 2019.

Other initiatives taken by the Chinese government, to boost the automotive sector and increase the sales of luxury cars in the country –
  • The government now allows international automakers to set up more than two joint ventures in the country, and most of the international players already have more than two joint ventures with their Chinese partners. Additionally, they can also set up wholly-owned companies in the country.
  • Currently, only ultra-premium luxury auto brands are imported in the country, which may benefit from lower import tariffs, as these brands are fully-imported from non-US factories.
Competitive Landscape

The China luxury car market is highly concentrated and majorly dominated by few players like Volkswagen AG, Daimler AG, Geely, Dongfeng, and BMW. Mercedes-Benz sold around 603,000 units of luxury cars in the country from January to November 2018 and achieved growth of 11.7%. Audi, which is part of the VW Group, witnessed an increase in its sales by 13%.

BMW also witnessed steady growth rate, and sold 577,000 units of vehicles in the first 11 months, achieving growth of 6.4% in comparison to 2017, and expected to witness the same or high growth in FY 2019-2020. The company is planning to introduce 21 BMW models into the Chinese market in 2019. If coupled with new models from other brands in the group, the total of new launches could reach 25.
Note: Product cover images may vary from those shown
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FEATURED COMPANIES

  • BMW
  • BYD Auto
  • Dongfeng
  • Ford Motor Company
  • Geely Holding Group
  • General Motors Company
  • MORE
1 INTRODUCTION
1.1 Study Deliverables
1.2 Study Assumptions
1.3 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.3 Market Restraints
4.4 Industry Attractiveness - Porter's Five Force Analysis
4.4.1 Threat of New Entrants
4.4.2 Bargaining Power of Buyers/Consumers
4.4.3 Bargaining Power of Suppliers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry

5 MARKET SEGMENTATION
5.1 By Vehicle Type
5.1.1 Hatchback
5.1.2 Sedan
5.1.3 SUV
5.2 By Drive Type
5.2.1 IC Engine
5.2.2 Electric Vehicles

6 COMPETITIVE LANDSCAPE
6.1 Vendor Market Share**
6.2 Company Profiles*
6.2.1 Mercedes Benz
6.2.2 Volkswagen AG
6.2.3 BMW
6.2.4 Dongfeng
6.2.5 General Motors Company
6.2.6 Geely Holding Group
6.2.7 BYD Auto
6.2.8 Ford Motor Company

7 MARKET OPPORTUNITIES AND FUTURE TRENDS

8 DISCLAIMER
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  • Mercedes Benz
  • Volkswagen AG
  • BMW
  • Dongfeng
  • General Motors Company
  • Geely Holding Group
  • BYD Auto
  • Ford Motor Company
Note: Product cover images may vary from those shown
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