With more minted Millionaires popping up in China every day, all luxury car companies were enjoying record sales in China. The Rich Chinese loved to buy expensive cars as they flaunt their wealth on the streets of Beijing, Shanghai and Shenzen.
But the party is now over. Due to a government crackdown on graft and conspicuous consumption, luxury sales have slowed down immensely in China. Foreign cars in China are much more expensive due to import taxes and tariffs. A BMW that sold in the USA for $50,000.00 would easily sell for 3x that much in China. If you’re a Chinese official making only $30,000.00 US annually but you drive a $150,000.00 USD Porsche, how does that look to the everyday Chinese man/woman? You get the picture.
Take Porsche for instance. Porsche since 2010 has tripled their sales in China to 47,000 vehicles. For reference, Porsche sold 53,000 vehicles in the USA. But that party is over – China sales may fall below 5 percent in 2016.
BMW began making the X1 compact crossover in China in 2012; Mercedes-Benz will build the rival GLA there this year. The brands previously focused on extended-wheelbase sedans for their often-chauffeured Chinese customers. “China is turning into a much more mature market,” Audi Chief Executive Officer Rupert Stadler said in May. “Competition will intensify” as the anti-corruption drive saps demand for luxury rides, he said.
Chinese buyers are just getting cheaper. They still like the luxury cars but instead of maxing out at the most expensive, they’re do with the cheaper models now.
Chinese are just getting damn cheap. All the luxury brands are now screwed for growth.