China Luxury Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2026)

The China Luxury Car Market is segmented by Vehicle Type (Hatchback, Sedan, and Sports Utility Vehicles) and Drive Type (IC Engine Vehicle and Electric Vehicle). The report offers market size and forecast for china luxury car market as value (USD billion) for all the above segments.

Market Snapshot

CAGR Graph.png
Study Period:

2018- 2026

Base Year:

2020

CAGR:

>8 %

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Market Overview

The China Luxury Car Market is expected to register a CAGR of over 8% during the forecast period 2021 - 2026. The market was valued at USD 160 billion in 2020 and is anticipated to reach USD 260 billion by 2026.

The China Luxury Car Market is expected to register a CAGR of over 8% during the forecast period 2021 - 2026. The market was valued at USD 160 billion in 2020 and is anticipated to reach USD 260 billion by 2026. As the economy slowly recovering from the COVID-19 pandemic, consumer demand for premium cars has increased.

Most major luxury brands see China as the fastest-growing market in terms of growth rate. China is not only the largest auto market in the world, but it is disproportionately important to German premium car brands. The German Luxury car manufacturers Mercedes-Benz, BMW, and Audi all posted record sales last year despite the industry faced a decline in the past two years. Mercedes-Benz reported a year-on-year increase of 22.4 percent while the same that of other carmakers like BMW and Audi is 15.4% and 10.6% respectively.

According to data from the China Automobile Dealers Association, China’s luxury vehicle sales in the first 11 months of the year 2020 exceeded 3 million units with a year-on-year increase of 9.3%. This also marked the third consecutive year for luxury brands to register growth in the wake of downward pressure in China's overall automotive market.

The Chinese auto market continues to have great potential due to the higher rise in demand for premium cars. Luxury carmakers posted a positive sales growth from 2018 with a significant increase in demand for luxury cars among young people.

Currently, the luxury carmakers focussed on catering highly advanced cars with better connectivity to the smart devices and internet. This also plays a crucial role in sales surge of premium cars.

Scope of the Report

The China luxury car market covers all the latest R&D initiatives, investments done by the government, and vehicle manufacturers across the country. The report studies the latest technological trends, market share of luxury vehicle manufacturers across the country.

The Chinese luxury car market has been segmented by vehicle type and drive type. Based on vehicle type, the market is divided into three types. Hatchbacks, Sedans, and SUV's. On the basis of drive type, the market is divided into two types namely IC Engine and Electric. The report offers market size and forecast for china luxury car market as value (USD billion) for all the above segments.

Vehicle Type
Hatchback
Sedan
Sports Utility Vehicle
Drive Type
IC Engine Vehicle
Electric

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Key Market Trends

Premium Automakers and Second-Tier Brands Gaining Market Traction

The carmakers are targeting the Gen Z consumers as they are more receptive to new technologies, aware of market trends, and their focus to have a stand-out personality. Owing to this the luxury automakers are focusing more on providing different connectivity features in their vehicles. The trend can be seen in the mass market segment as well.

The country’s luxury car market is led by European automakers, namely, Mercedes-Benz and Audi. And BMW. In November 2020, around 340,000 luxury vehicles were sold across the country of which Mercedes-Benz sold a total of 72,000 vehicles, BMW sold 74,000 vehicles and Audi sold 71,000 vehicles. BMW became the leading brand in the country, with a monthly sales volume of 44,582 units (including the sales of Mini cars).

Among Chinese brands, Geely Automobile Holdings Ltd. is among the companies to have responded with heavy price cuts, which were managed by reducing the specifications and features of its vehicles. While Geely's sales rose 24.7% year over year in May. China's iconic sedan brand Hongqi registered a new sales record in 2020, with the number of vehicles manufactured and sold both exceeding 200,000 units.

Tesla sold around 135,400 vehicles last year, a record for the company and making it the bestselling EV brand in the country

china luxury car market_segment

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Changing Policies and Tax Regulations Likely to Drive the Market

Initiatives took by the Chinese government to boost the automotive sector and increase the sales of luxury cars in the country also helped in sales growth and attract new investments. 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.

The government now allows international automakers to set up more than two joint ventures in the country. 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. These conditions create opportunities for other luxury brands to tap into the market. On the other hand, luxury car manufacturers are also cutting down the prices of their vehicle models, to increase their sales in coming years.

In 2018, around 2.82 million cars from the premium segment were sold in China, up from about 2.61 million luxury cars sold in the previous year. Additionally, the premium sport-utility segment increased by approximately 3.5%, between January and November, in 2018.

Irrespective of the aforementioned trade war, the country witnessed a steady growth in luxury car sales. To mitigate the effect of the trade war, companies, such as Mercedes-Benz, Audi, and BMW, are planning to increase its production in China, 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.

For instance, in 2019 Tesla Inc become the first international company to operate fully-owned manufacturing plant without a local partner.

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.

china luxury car market_segment2

Competitive Landscape

The Chinese luxury car market is fairly consolidated and majorly dominated by few players, like Daimler AG, BMW, Audi, Geely, Toyota Motors, and Tesla. Some of the major companies have their manufacturing plants set up in the country, giving them a cost advantage over their rivals, and further, providing a shorter timeline for the dispatch of their produced vehicles.

Volkswagen (including Audi), Daimler (Mercedes-Benz), and BMW are the top three players in the country In absolute terms. BMW dominates the market with the highest sales than its German counterparts

Other players include Ferrari, Bentley, Jaguar Land Rover, Hongqi, Rolls-Royce Holding PLC, Acura, Infinity, amongst others.

Recent Developments

  • Mercedes-Benz and CATL (Contemporary Amperex Technology Co. Limited) have entered a strategic partnership to create cutting-edge battery technology for high-volume electrification of the Mercedes-Benz model portfolio.
  • South Korea's SK Holdings and China's Zhejiang Geely Holding Group Co Ltd will each invest USD 30 million in a new mobility investment fund.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Drivers

    2. 4.2 Market Restraints

    3. 4.3 Industry Attractiveness – Porter's Five Forces Analysis

      1. 4.3.1 Threat of New Entrants

      2. 4.3.2 Bargaining Power of Buyers/Consumers

      3. 4.3.3 Bargaining Power of Suppliers

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION

    1. 5.1 Vehicle Type

      1. 5.1.1 Hatchback

      2. 5.1.2 Sedan

      3. 5.1.3 Sports Utility Vehicle

    2. 5.2 Drive Type

      1. 5.2.1 IC Engine Vehicle

      2. 5.2.2 Electric

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share

    2. 6.2 Company Profiles

      1. 6.2.1 Daimler AG (Mercedes-Benz)

      2. 6.2.2 Zhejiang Geely Holding Group

      3. 6.2.3 BMW AG

      4. 6.2.4 Volkswagen Group (Audi AG)

      5. 6.2.5 Tata Sons Private Limited (JAGUAR LAND ROVER LIMITED)

      6. 6.2.6 Rolls-Royce Holding PLC

      7. 6.2.7 Bentley Motors

      8. 6.2.8 General Motor Company

      9. 6.2.9 Tesla Inc.

      10. 6.2.10 Dongfeng

      11. 6.2.11 Infinity (Nissan Motor Co Ltd)

      12. 6.2.12 Acura (Honda Motor Co Ltd)

      13. 6.2.13 Cadillac (General Motors Company)

      14. 6.2.14 China FAW Group Co.,Ltd

      15. 6.2.15 The Lincoln Motor Company

      16. 6.2.16 Lexus (Toyota Motor Corporation)

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

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Frequently Asked Questions

The China Luxury Car Market market is studied from 2018 - 2026.

The China Luxury Car Market is growing at a CAGR of >7% over the next 5 years.

  • Daimler AG (Mercedes-Benz)
  • BMW AG
  • Volkswagen Group (Audi AG)
  • Lexus (Toyota Motor Corporation)
  • Zhejiang Geely Holding Group

Are the major companies operating in China Luxury Car Market.

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