Economy slowdown, BMW expects lower sales growth in Chin
BMW said it
expects slower sales growth in China this year, as the premium car makers deal
with a slowdown in economic growth and intensifying competition in one of its
most lucrative markets.
The German automaker said in the Shanghai auto show this weekend that he expects China sales growth above single digits. In 2012, BMW reported sales in China rose 40% to about 326,000 vehicles. Speaking at the Motor Show, Ian Robertson, board member responsible for sales and marketing, gave a more cautious note, saying he had not anticipated growth rates as high as those seen in the past. "The market is maturing a bit," he said. "We are waiting for normalization of growth figures in the coming years."
BMW had been one of the fastest growing and biggest luxury automakers in China. In the first three months of the year, the company sold 80,570 vehicles, up 7.4% from the same period last year.
Reviews of Mr. Robertson, who disagree with the sales projections of growth in more-robust analysts to China's premium segment, suggest luxury car market in the country could further delay of schedule as well as a number busy car manufacturers competing for a larger part of their growth. IHS Global Insight forecasts growth of 17% for the segment. A recent report by McKinsey & Co. expected to grow 12% annually through 2020, exceeding growth forecast of 8% in the overall car market.
Car sales in China rose 7.1% in 2012-15500000 vehicles, according to semi-official China Association of Automobile Manufacturers. The premium car market accounts for 9% of all passenger car sales, according to McKinsey, compared with 4% in Japan and 6% in South Korea.
Others say BMW conservative tactic reflects recent changes in the business environment of China, including a continued slowdown in economic growth and a greater emphasis on austerity newly appointed President Xi Jinping.
China's gross domestic product grew 7.7% in the first quarter on a year to year basis, down from 7.9% the previous quarter. Analysts polled by The Wall Street Journal had forecast growth of 8%.
"This should be an important warning sign of the premium and luxury goods manufacturers, and that could affect consumer confidence" in 2013, said Andreas Graef, director of the management consultancy AT Kearney Shanghai Office.
A unit fighting corruption led by President Xi means that conspicuous consumption of luxury goods is frowned increasingly in China and encourages government officials to ride the Chinese brand cars.
However, the premium automakers say they still do not feel the effects of the austerity policy.
"We are very aware of this, but we see a big impact," said Hubertus Troska, (DAI.XE, DDAIY) member of the board of Daimler AG and head of China said Saturday. Daimler owns the Mercedes-Benz brand.
Dietmar Voggenreiter, President of Audi China, downplayed the recent actions of the Chinese government to encourage officials traveling on domestic brand vehicles. (VOW.XE, VLKAY) Audi of Volkswagen AG, the largest maker of luxury cars in China, had been a popular choice among the ruling classes of China. "We're targeting customers more government," he said, adding that 90% of buyers of its cars in China were private.
Analysts say BMW-specific factors are also behind modest growth projections of the company.
Mercedes-Benz has a strong model of plan-launch in 2013 and has worked local distribution issues ", and that will give a boost in the market for more than BMW," said Graef AT From Mr. Kearney. BMW also be the aim of keeping prices to focus on margins rather than market share, he said, adding, "this could affect the growth of BMW sales."
A BMW spokesman said part of the reason for the lower growth rate was due to the base effect. "Thanks to our huge base, the growth rate of 10% is not bad," he said.
Currently three German brands - Audi, BMW and Mercedes-Benz Daimler - dominate the segment.
China Audi said sales of the company increased by 14% in the first quarter to 102,800. "We are growing faster than the premium market," he said, predicting "another successful year" for the company this year in China.
IHS Automotive analyst Namrita Chow said Audi is "going all out" to capture market share by introducing new models and the expansion of local production.
Mr Voggenreiter said Audi produced 350,000 vehicles in China and plans to double that in the future, but did not give a specific time frame.
Ms. Chow said automakers were fighting "tooth and nail" to get a piece of the premium market. General Motors Co. GM 0.59% on Friday announced a renewed push in China to boost sales of its luxury brand Cadillac.
Sales of Mercedes-Benz in China in the first quarter fell 11.5% from a year earlier, the company said recently, although sales in March rose 5.4%.
"Certainly we've seen most dynamic times in China, but still see decent growth," said Mr. Daimler Troska. He said he was "cautiously optimistic" about the market outlook, saying it expects to sell more than 300,000 vehicles in China in 2015. Mercedes-Benz will add 75 new dealerships by the end of 2013 to the current 262, said.
"The premium segment [in China] has great potential. A prosperous middle class will help," said Mr. Troska.
The German automaker said in the Shanghai auto show this weekend that he expects China sales growth above single digits. In 2012, BMW reported sales in China rose 40% to about 326,000 vehicles. Speaking at the Motor Show, Ian Robertson, board member responsible for sales and marketing, gave a more cautious note, saying he had not anticipated growth rates as high as those seen in the past. "The market is maturing a bit," he said. "We are waiting for normalization of growth figures in the coming years."
BMW had been one of the fastest growing and biggest luxury automakers in China. In the first three months of the year, the company sold 80,570 vehicles, up 7.4% from the same period last year.
Reviews of Mr. Robertson, who disagree with the sales projections of growth in more-robust analysts to China's premium segment, suggest luxury car market in the country could further delay of schedule as well as a number busy car manufacturers competing for a larger part of their growth. IHS Global Insight forecasts growth of 17% for the segment. A recent report by McKinsey & Co. expected to grow 12% annually through 2020, exceeding growth forecast of 8% in the overall car market.
Car sales in China rose 7.1% in 2012-15500000 vehicles, according to semi-official China Association of Automobile Manufacturers. The premium car market accounts for 9% of all passenger car sales, according to McKinsey, compared with 4% in Japan and 6% in South Korea.
Others say BMW conservative tactic reflects recent changes in the business environment of China, including a continued slowdown in economic growth and a greater emphasis on austerity newly appointed President Xi Jinping.
China's gross domestic product grew 7.7% in the first quarter on a year to year basis, down from 7.9% the previous quarter. Analysts polled by The Wall Street Journal had forecast growth of 8%.
"This should be an important warning sign of the premium and luxury goods manufacturers, and that could affect consumer confidence" in 2013, said Andreas Graef, director of the management consultancy AT Kearney Shanghai Office.
A unit fighting corruption led by President Xi means that conspicuous consumption of luxury goods is frowned increasingly in China and encourages government officials to ride the Chinese brand cars.
However, the premium automakers say they still do not feel the effects of the austerity policy.
"We are very aware of this, but we see a big impact," said Hubertus Troska, (DAI.XE, DDAIY) member of the board of Daimler AG and head of China said Saturday. Daimler owns the Mercedes-Benz brand.
Dietmar Voggenreiter, President of Audi China, downplayed the recent actions of the Chinese government to encourage officials traveling on domestic brand vehicles. (VOW.XE, VLKAY) Audi of Volkswagen AG, the largest maker of luxury cars in China, had been a popular choice among the ruling classes of China. "We're targeting customers more government," he said, adding that 90% of buyers of its cars in China were private.
Analysts say BMW-specific factors are also behind modest growth projections of the company.
Mercedes-Benz has a strong model of plan-launch in 2013 and has worked local distribution issues ", and that will give a boost in the market for more than BMW," said Graef AT From Mr. Kearney. BMW also be the aim of keeping prices to focus on margins rather than market share, he said, adding, "this could affect the growth of BMW sales."
A BMW spokesman said part of the reason for the lower growth rate was due to the base effect. "Thanks to our huge base, the growth rate of 10% is not bad," he said.
Currently three German brands - Audi, BMW and Mercedes-Benz Daimler - dominate the segment.
China Audi said sales of the company increased by 14% in the first quarter to 102,800. "We are growing faster than the premium market," he said, predicting "another successful year" for the company this year in China.
IHS Automotive analyst Namrita Chow said Audi is "going all out" to capture market share by introducing new models and the expansion of local production.
Mr Voggenreiter said Audi produced 350,000 vehicles in China and plans to double that in the future, but did not give a specific time frame.
Ms. Chow said automakers were fighting "tooth and nail" to get a piece of the premium market. General Motors Co. GM 0.59% on Friday announced a renewed push in China to boost sales of its luxury brand Cadillac.
Sales of Mercedes-Benz in China in the first quarter fell 11.5% from a year earlier, the company said recently, although sales in March rose 5.4%.
"Certainly we've seen most dynamic times in China, but still see decent growth," said Mr. Daimler Troska. He said he was "cautiously optimistic" about the market outlook, saying it expects to sell more than 300,000 vehicles in China in 2015. Mercedes-Benz will add 75 new dealerships by the end of 2013 to the current 262, said.
"The premium segment [in China] has great potential. A prosperous middle class will help," said Mr. Troska.
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