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I realize this isn't exactly news for most of us, but I think the first paragraph says it all: "Aston Martin, Ferrari, Bentley, Maybach, Cadillac, Lexus...", it's nice to see Cadillac lumped in with that crowd! Better get used to it... B)

Luxury cars line up for China

Aston Martin, Ferrari, Bentley, Maybach, Cadillac, Lexus ... the world's luxury car makers are all lining up for a slice of China's red-hot car market.

Their prices may be far beyond the grasp of ordinary consumers, but that is no deterrent in a market that saw growth of 75 percent last year and is likely to post sales above 2 million units this year.

DaimlerChrysler, maker of the Mercedes Benz Maybach luxury saloon, expects to sell 1,000 examples a year, at up to $750,000 each, adding to the 130,000 Chinese customers who already drive a Benz.

Italian sports car maker Ferrari, part of the Fiat group, has just opened its first Chinese showroom in Shanghai, with another 10 outlets to come in the next 18 months.

It expects a steady stream of customers for its $360,000 Ferraris and Maseratis in a country where the annual disposable income of urban citizens averages around $1,000.

Similarly, world No. 2 maker Ford announced just before the China Auto Show began in Beijing last week that it would open dealerships for its Aston Martin sports car next year.

According to Xinhua news agency, the British marque Bentley has sold 15 cars in Shanghai since the beginning of this year.

Toyota's Lexus also plans a string of exclusive dealerships in Beijing, Shanghai, Guangzhou and other key cities, and later this year General Motors will start making Cadillac sedans in its Shanghai joint venture factory.



These are the cars that draw the gasps at the motor shows, but on a more prosaic level there are big moves afoot in China.

Market leader Volkswagen and other leading makers including GM, Hyundai, Toyota and Renault are all looking to step up production in their various joint ventures.

GM, for example, said last week it planned to spend $3 billion in the next three years to double capacity in China, and South Korea's Hyundai Motor followed suit Tuesday, saying it would spend another $740 million to double its China capacity to 600,000 units by 2007. (Full story)

Hyundai, which has a joint venture with Beijing Automotive Industry Holdings, aspires to have 20 percent of China's passenger car market by 2010.

Behind U.S., Japan

By 2007 it is likely to eclipse Japan, despite a slowdown in the growth rate in recent months as China's leadership moves to cool the economy's blistering pace.

Sales in the first five months of 2004 reached 957,000 units -- up 33 percent from the same period last year -- but the figures are starting to ease, month on month, as credit tightens.

Last week, China's National Development and Reform Commission updated its automotive industry policy, and in the process appeared to ban more than two joint ventures in the same type of vehicle production.

Hyundai and its affiliate Kia, which also has a joint venture in China, say they are not worried by the changes.

The policy also imposes restrictions on new entrants, requiring them to invest a minimum 2 billion yuan (about $240 million).

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"...Hyundai, which has a joint venture with Beijing Automotive Industry Holdings, aspires to have 20 percent of China's passenger car market by 2010."

I could be wrong, but this sounds a bit grandiose, no? Does Hyundai really expect to achieve this level in such a short time? That would essentially require the present market leaders VW and GM to roll over and play dead. And I'm doubtful that with all the aggressive players entering the market (Ford, Toyota, Honda, Nissan, and DCX), and with home-grown Chinese players wanting a piece of the action, Hyundai is going to be able to take 1 in 5 car sales by 2010. Geeze, even a dominant player like Toyota is only gunning for 10% in the near future!

Wake up, Hyundai!
 
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