British sports car maker Aston Martin is set to launch its first sport utility vehicle (SUV) in Beijing on Wednesday, underscoring the growing importance of the Chinese market, especially in terms of high-end vehicles.
The upcoming Aston Martin DBX SUV is the car maker's first foray into SUV territory and high-end family transportation.
The company best known for supplying James Bond with his wheels now aims to capitalize on the Chinese market, with the first launch of a car in China in the firm's 106-year history.
So why China?
Andy Palmer, CEO of Aston Martin, says China has big opportunities. "About 49 percent of Chinese are going to buy an SUV next time, so (we're) buying into that growth space."
"We've seen the total industry volume in that niche luxury sector (is) actually generally driven by the SUV demand. So the SUV is important, China is important. We designed the new car. We designed it around Chinese target customers. So it seems somehow right, we come here and launch it."
It's pretty crucial for the company, which is posting losses. But Palmer says he is not concerned about the market demand for this very first Aston Martin SUV.
"We purposely keep our volume very small. So Aston Martin is all about rarity. It's all about being a piece of art. So we don't want big volumes, but we anticipate about 4,000 a year around the world for this vehicle, may be picking up to 5,000, which is the maximum capacity that we have in the factory. But again, it's better to have over-demand and under-supply, always better than the other way around, keep them hungry," Palmer explained.
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On demographics, Palmer noted that buyers in China tend to be younger and there tend to be more female buyers.
"It's difficult to put your finger on it, but obviously being younger is part of it. But I think also when you've been around for 106 years in the UK, a lot of preconceptions are made about the car," Palmer said.
Palmer said the reason the company is making losses at the moment is that he is putting a lot of investment into the new plant.
"We represent a luxury company, but we also represent a huge growth company," Palmer said. "And obviously, that growth comes through the reinvestment and everything that we earn."
"We spent that on new products, and hence the reason that we struggle a little bit on the bottom line, particularly this year. The revenues are not easy to attain.
"We still grew globally by 13 percent in retail volume. So it is an enormous success on a typical scale, but not quite enough volume growth to pay for that factory."
Looking forward to the next year, Palmer said there will still be uncertainties such as Brexit and the China-U.S. trade war. But on the upside, there's a new 007 movie.
"We got a good collection of cars," he said. "And we have a couple of other moves as well, which will be interesting."