China becoming a buyer’s market for luxury cars
October 27, 2011 Category Automotive, Automotive Metals & Minerals
China is turning into a buyer’s market for luxury cars as dealers for BMW, Daimler and Volkswagen’s Audi offer discounts to maintain sales as demand cools. In Beijing, BMW dealerships have cut as much as 19% off the price of a 3-series car, while some Mercedes dealers are selling the C-Class Elegance model at 20% less than the retail price, according to cheshi.com, a pricing guide tracking more than 3,000 dealers in the country. BMW, Daimler and Audi, the three largest luxury carmakers, face slowing sales growth and falling prices, as some cities impose driving curbs and the central bank tightens lending. The growth in demand for high-end vehicles cooled to 29% in the first eight months of this year from 48% last year, according to researcher JD Power & Associates. A tightening economy may cause buyers, such as those in mid- to upper-level management jobs, to rethink or delay luxury purchases, said Scott Laprise, Analyst at CLSA Asia Pacific Market. High inventory levels for luxury brands are pressuring Chinese dealers to cut prices, JD Power said in a recent report. “While we expect luxury to outperform the sector, we are seeing early cracks in [the form of] sales slowing and discounting,” Laprise said. Audi’s A6L, China’s most popular premium car last year, sells for as much as 16% below the retail price in Beijing’s Fengtai district, according to cheshi.com, which started tracking car prices in 1999. Chinese buyers can choose from 471 models across 94 brands, and softening demand has cut or eliminated waiting times for high-end models. In September last year, customers waited about three months for entry-level luxury cars, but now the wait for these models is gone. “Mercedes-Benz has maintained its strong growth momentum during the first eight months of 2011 through sales of 123,590 units, an increase of 41%, said Daimler Spokesman Arnd Minne. In the first eight months of this year, Audi sold 196,534 cars in the mainland and Hong Kong, a 29% increase from a year earlier, while BMW was confident it would achieve record sales in China this year, the South China Morning Post reports.
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