Jaguar Land Rover expects to sell more vehicles in China than anywhere else in 2016, highlighting how upmarket carmakers are hoping for strong sales this year in spite of the country’s economic slowdown.
JLR’s unit sales in China fell last year, reflecting the impact of the country’s slowing economy and the government’s crackdown on conspicuous spending. While some other luxury carmakers had record sales growth, several missed their targets because of the same factors.
China was the best selling market for JLR, owned by India’s Tata Motors, in 2014, but last year it sold the most vehicles in the UK.However, speaking at the Beijing International Automotive Exposition on Monday, Ralf Speth, JLR chief executive, said China would regain its position as the company’s “number one [market] in terms of volume” in 2016 following a positive first quarter.
Mr Speth said he expected China to regain top spot with UK-based JLR in 2016 partly because the country’s economy was expanding at a relatively strong pace, even if growth was less than in previous years.
His optimism was shared by several rivals, and analysts expect sales of luxury cars in China to rise at a faster rate this year than those of mass market vehicles.
But the luxury car segment risks over crowding. “Everyone wants to become premium — but the premium market is not growing that fast,” says Clemens Wasner at EFS Consulting.
“To make it in the segment now you have to grab market share from someone else.”
Audi, the most popular upmarket carmaker in China, has been affected by the frugality campaign presided over by President Xi Jinping.
Audi rose to prominence in the country partly thanks to its role as “the official’s car” — an unofficial title earned from its popularity among government officials.
However, Audi, a unit of Germany’s Volkswagen group, is experiencing slowing sales growth in China this year.
Unit sales rose 4.2 per cent in the first quarter compared with the same period in 2015. By contrast, sales rose 10.5 per cent year on year in the first quarter of 2015.
But the company is still positive about China. Young consumers in the country are the future for Audi, said Joachim Wedler, its president, noting that the average age of the buyers of the company’s cars in China was 36. “Our history as an official’s car has changed tremendously.”
Incoming brands are keen to expand their presence. Lincoln of the US, Ford’s luxury brand, went from having no China dealerships to 37 in the past 18 months, with a target of 60 by the end of this year, said Kumar Galhotra, president of the marque.
“China as a market is going to pass the US as the number one luxury market in the next few years,” he added.
China has already overtaken the US in sales of mass market vehicles.
Some upmarket carmakers hope new China-focused tactics will allow them to outpace rivals.
Volvo, owned by China’s Geely, revealed a special interior for its S90 luxury saloon. The design has no passenger seat, instead creating an area the length of the interior for work or relaxation — rather like a first-class suite on a passenger jet.
“This very special interior was developed here in China and it will be built here only in China,” said Hakan Samuelsson, Volvo president.