Market Trends of China Luxury Car Industry
Premium Automakers and Second-Tier Brands Gaining Target Market Traction
- Carmakers target Gen Z consumers as they are more open to new technologies, are aware of market trends, and value a unique personality. As a result, luxury automakers are focusing more on offering various connectivity features in their vehicles. The trend can also be seen in the mass market segment.
- European automakers Mercedes-Benz, Audi, and BMW dominate the country's luxury car market. Despite the COVID-19 pandemic, Chinese customers purchased 3.09 million premium vehicles from Mercedes-Benz, BMW, Bentley, and Rolls-Royce in 2022, a 6% increase from the previous year.
- 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.
- For instance, in March 2022, A large luxury off-road SUV was introduced by Great Wall Motor Co., Ltd. It is available in ten different variations, divided into four editions: business, sports, customized, and black knight.
Understand The Key Trends Shaping This Market
Download Sample
Growing Trend of EV are Likely to Drive the Market
- Initiatives taken 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 attracted new investments. In terms of policy and taxation reforms, the country 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 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 the coming years.
- This year, an all-electric vehicle or a plug-in hybrid will account for one-quarter of all new cars sold in China. According to some estimates, more than 300 Chinese companies are producing electric vehicles, ranging from low-cost models under USD 5,000 to high-end models that compete with Tesla and German automakers. There are approximately four million charging units in the country, which is more than double the number from a year ago, with more on the way. Major players are also coming up with luxury electric vehicles in the country.
- For instance, in June 2022, Cadillac announced that the Lyriq luxury SUV, the brand's first all-electric vehicle, is now available for order in China, accelerating the brand's transition to an electric future in its largest market. There are three variants available, each priced between RMB 439,700 (USD 63,154.42) and RMB 479,700 (USD 68,899.65).
- While markets are still heavily reliant on subsidies and financial incentives, China has entered a new phase in which consumers compare the features and prices of electric vehicles to those of gas-powered vehicles without much regard for state support. The United States has fallen far behind. This year, the country passed a critical threshold, with electric vehicles accounting for 5% of new car sales. China surpassed that mark in 2018.
- Of the top ten best-selling E.V., Half of the brands are Chinese, led by BYD, which trails only Tesla in global market share and is beginning to ship its electric vehicles abroad. And it's not just auto sales that are booming in the country. The Chinese battery manufacturers CATL and BYD are the industry's biggest players, and Beijing controls access to critical raw materials.
