China's luxury brands are overtaking mass-market cars
Updated 17:07, 07-Oct-2020
By Xia Cheng

A divergence is showing in the Chinese auto market between mass-market carmakers and luxury brands in terms of their sales in China.  

The latest data show that by August, Chinese passenger car sales were at 7.7 million units, down 23 percent from a year ago. Meanwhile, premium and luxury cars together saw sales grow 1 percent in the first six months.

Breaking down those numbers, sales of premium and luxury cars in China are showing stronger momentum this year than in 2019. Sales hit bottom in the first quarter this year because of the pandemic.

But they rebounded in April and have been beating sales figures from a year ago. The market forecast for premium car sales growth in the third quarter will be faster than in the second quarter. 

If we look at British premium and luxury carmakers, a significant portion of the global luxury car market, some of the biggest names have been suffering from the pandemic. For example, the UK's biggest carmaker, Jaguar Land Rover (JLR) and super-luxury carmakers Bentley, McLaren and Aston Martin are all cutting jobs and either posting losses or profit warnings. 

JLR has cut jobs during the pandemic to save costs, and the company's parent Tata has been giving profit warnings on the automaker due to a sales slump. 

However, Richard Shore, JLR president of integrated marketing, sales and service for China, said China has been showing resilience in premium car sales during the COVID-19 pandemic. The company is introducing a plug-in hybrid version of the Discovery to the Chinese market, hoping to capitalize on the electric vehicle (EV) boom in China. 

"(The Discovery sports plugin hybrid electric vehicle is) the first for the range here. It's based on technology manufactured here in China. So, it's very exciting for us to launch it here. And it's a great product because it has all the green credentials you expect," said Shore.

"Post lockdown, China sales, especially in the premium sector, have been very strong this year. So, we're optimistic that will sustain at least to the end of 2020 and hopefully into 2021."

Rolls Royce also expects to be profitable this year despite its sales slump during the pandemic. China is a key market for its global sales.

Leon Li, Rolls-Royce's China director, told CGTN at the 2020 Beijing auto show that the company's China sales in 2020 have so far outperformed the company's expectations, giving them the confidence to stay cautiously optimistic about 2021. 

"I think, globally, we still face a lot of challenges with COVID-19. But in China, I think with the quick containment of the pandemic by the Chinese government, I think we have seen lots of promising signs, starting from the second quarter, and this momentum is being carried into the third quarter. So, we have seen better than expected recovery from the Chinese market," he said, adding that the optimism was why Rolls-Royce rolled out its global debut of the latest in its Ghost series. 

Another trend, according to Li, was a diversified customer base in China. He said China has the youngest consumers compared to the rest of the world.  

"On average, our customers in China are only 40 years old. These customers are very internationalized, very lifestyle driven." 

Despite an overall trend toward EV and automation, the British luxury maker told CGTN the company was not in a rush to pursue the hottest auto technologies in the next one or two years. Instead, the company will incorporate these technologies into their products in the coming decade to strike a balance between technology and luxury. 

(Cover: CFP)