China's love affair with luxury cars
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Super-luxury cars are back in vogue in China, even though the nation's highway network and the disposable income of its citizens still fall far short of Western standards.
Wealthy business people in China are ready to splash out upwards of 38 million yuan (US$5.6 million) to buy dream cars manufactured by Bugatti, Lamborghini and other luxury car makers. They are also more discerning about all the sporty extras, such as personalized interior colors and floor mats inscribed with their names.
The surge in buying has luxury car makers going into overdrive with new models and expanded dealer networks. The race is on to fill a lucrative niche market while sales in more developed markets are still suffering the after-effects of the global financial crisis.
At least a dozen new luxury models premiered in the Chinese market in the first half of this year including the 40 million yuan Bugatti Veyron super sports car and the 10 million yuan Rolls Royce Phantom Extended Wheelbase Edition.
Sales of these cars aren't confined only to the wealthy coastal regions of China. Luxury auto manufacturers are also looking inland, where a new breed of well-heeled consumers is on the rise.
The high enthusiasm in China is a sharp contrast from Western markets where the luxury segment is still gloomy in the post-crisis era, said Stephan Winkelmann, chairman and chief executive officer of Lamborghini.
Asia-Pacific markets have recovered much better than expected, with tremendous growth not only in China but also elsewhere in the region. By contrast, the luxury car market in the United States is still languishing and not expected to revive until 2011. In Europe it's a similar story. Luxury car sales in the first six month of this year remained at 2009 levels.
But is the boom in China sustainable? Some market analysts are wondering. They point out that luxury car sales may face stiffer pressure in the second half of this year amid concern about slowing growth policies, restraints on the property market and wobbles in stock markets.
At the same time, market competition is expected to increase, putting downward pressure on car prices.
"The economic complexity will restrict the demand for super-luxury cars in the second half, and we expect the rapid growth in sales to slow," said Xu Di, marketing director of China's Auto Trading Co Ltd, the country's main vehicle importer.
"But we are still optimistic about growth," Xu added. "It's not only because of the low comparison base but also the amazing purchasing power of China's nouveau riche."
China's booming business prosperity has spawned a new generation of wealth. Last year, according to the Hurun Report - a monthly magazine best known for its "China Rich List" - six in every 10,000 mainland people have personal assets worth 10 million yuan or more.
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