Luxury car makers look to diversify to buffer from the economy

Isaac Mostovicz writes that luxury car makers are having to diversify and look to new markets if they are to insulate themselves from future financial turmoil...

Luxury car makers are increasingly showing two faces to consumers – one mean, one green – according to this recent Wall Street Journal post titles “Retooling Luxury Cars for a Younger Generation”.

The article explains that as well as building an array of high-horsepower performance cars, makers are also bringing out ‘green’ cars such as the electric BMW i3 – a concept car made of aluminum and carbon fiber. These vehicles will no doubt appeal to younger, more environmentally conscious luxury consumers who still want to buy premium goods.

BMW i3

Many of these new ‘green’ vehicles are built in a different manner, requiring money to innovate, which in turn requires customers to keep buying traditional cars, as the article highlights:

“To pay for expensive no-petroleum car technology, European luxury marques must keep their traditional clientele happy and [paying] big money for fancy cars for as long as possible.”

Luxury car brands are now more than ever looking to Asia for growth, where there is growing demand for these vehicles, and they hope that this will insulate them from any possible dips in European spending. I have written before about the growing luxury market in Asia, particularly in China. Diversification is now important in insuring that brands are safe from any downturns, although the market looks to be recovering, set to rise this year by almost thirty per cent.

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Aston Martin pushes hard into the Chinese luxury car market

Isaac Mostovicz writes that Aston Martin's hard push into the Chinese luxe auto market may signal a growing luxe market for the super-rich...


The race for the hearts and minds of China’s luxe car buyers is on, as Aston Martin joins BMW and Audi in upping production and overall presence in China.

The China Daily reports that Aston Martin opened its flagship China showroom in Beijing this past week.

The store, located at 66 Jinbao Street, Chaoyang District, is more than twice as big as Beijing’s other two Aston Martin stores and is the largest in Asia Pacific. The 500 sq m showroom will display seven of the luxury vehicles each costing roughly 1.3 million yuan.

Given that Aston Martins are typically more expensive than BMW, Mercedes or Audi vehicles, this move suggests that the demand is outstripping supply. This points to a new opening in the market for the super-rich.

While the entire article is interesting, because it further illustrates the growth in luxury goods and demand in Asia, there’s one quote in particular that is quite revealing of the way luxe brands are thinking about China.

Matthew Bennett, regional director for Aston Martin Asia-Pacific, said the following:

“(Beijing) has a growing appreciation for luxury goods and an authenticity of a product, that’s what we’ve been seeing. … “This is the place to be.”

The phrasing is interesting, too. The “authenticity of a product” suggests a targeting of the Lambda personalities, who prefer both high quality and an air of exclusivity to their purchases.

Another statistic worth noting is that about 80 Aston Martin vehicles were sold in China last year. Even upping that number to 100 would allow Aston Martin to retain its shine of exclusivity.

Staysha says of this article...

Extremely helpful atrilce, please write more.

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Luxury car manufacturers Mercedes and BMW clash for India dominance

Isaac Mostovicz writes that India's position as the new battleground for luxe brands could be the beginnings of an industry shift...


India has become a battleground for the luxury industry, with both BMW and Mercedes competing for the spot of top luxe car brand in the country.

This year BMW plans to launch three new luxury brands in India, according to the Press Trust of India. BMW India President Peter Kronschnabl told reporters:

“BMW Group will further increase its commitments in India by bringing in more investments in the country through further capital investment in BMW plant in Chennai and BMW Financial Services India.”

This move likely comes in response to recent overtures by Mercedes aiming to regain the top spot in India from BMW. In the India Times, Mercedes Benz CEO Wilfried Aulbur explained why he thought Mercedes fell behind BMW in 2009:

“We lost out BMW in 2009 because of limited availability of our E-Class car” … “This will be a blockbuster year for us in India. We have launched new cars and would import several models to build up excitement through the entire year.”

I wrote previously that luxe brands are now finding themselves competing for dominance in non-traditional luxe markets, particularly in Asia. This is just an extension of that. Meanwhile in China, luxe car brands are also doing battle for market dominance, particularly Audi and BMW.

While the West continues to recover from the crippling recession, Asia will continue to grow its luxe markets, thanks in part to newly-wealthy Lambda personalities now throwing their wealth around. With all the uncertainty in the luxe industry today, one thing is certain: 2010 will be a very interesting year for luxe in Asia.

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Chinese luxe market becomes a boon for car companies

Isaac Mostovicz writes that luxury automotive companies are beginning to see China as their saving grace...


Asia is continuing to serve as the luxury industry’s bright spot amongst an otherwise dismal global market, due largely to the recession. I wrote previously about BMW seeing growth in its Chinese market, which triggered a planned seven-fold increase in its China production capacity.

It appears that the phenomenon is not limited to BMW. Other luxe car companies are seeing considerable increases in the number of cars sold year on year. AFP reports:

Audi said earlier that it had sold 8.9 percent more cars in November on a 12-month basis, with Chinese sales leaping by 101.9 percent to 16,503 vehicles as the company surpassed its annual sales target there, a statement said.

This signals yet another instance where China is making gains whilst Japan tries to pull its luxe market back into place. Since I wrote in November that Japan was facing a loss of confidence by luxe retailers, investment into lesser-known Asian luxe markets has moved forward. As China continues to liberalise its economy, its luxe industry will only grow further.

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BWM goes deep as China sales soar

Isaac Mostovicz writes that the surge in newly-wealthy Chinese Lambdas has boded well for BMW's bottom line...


Luxe in China continues to grow at staggering rates. Some of this could be cast-offs from the falling Japanese luxe market. Whatever it is that is luring luxe brands to China, it is showing no signs of letting up.

In China Daily this week it was reported that luxury car maker BMW is planning for a seven-fold increase in its China production capacity:

The German carmaker’s strategic plan is to increase annual production to 300,000 units with local partner Brilliance China … Its joint venture with Brilliance now has a 41,000-unit plant in Shenyang, capital city of northeastern Liaoning province. The facility’s capacity will be expanded to 75,000 units next year.

I wrote previously that this surge in luxe capital and spending in China is likely the work of newly-wealthy Lambda personalities who are splashing their cash around. This won’t save the entire industry, but for luxe brands in China, this bodes well for the future.

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