China Market, World Opportunity: Global luxury car brands cash in on China's new wealth

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03:02

China is the world's largest car market and is fueling the growth of luxury car sales. And those hitting Chinese roads in their hot new rides are mostly among the country's most privileged young people. CGTN's Xu Mengqi takes a closer look.

DANIEL ZIPSER SENIOR PARTNER, MCKINSEY & COMPANY "One thing that is unique about China is wealthy typically in the young generation."

WANG YAN, EXECUTIVE VICE PRESIDENT PR & CORPORATE COMMUNICATIONS, JAGUAR LAND ROVER CHINA "Our luxury consumers are much younger, compared with their counterparts in other markets."

35-year-old Li Xuekun is part of China's rising class of young and wealthy millennials. With a good education and a well-paying job in downtown Shanghai, he bought his first luxury car at the age of 30: a Porsche SUV. The price tag: 1.4 million yuan; about 203,400 US dollars.

LI XUEKUN PRIVATE EQUITY FUND MANAGER "I saw it as a kind of encouragement for myself. It was also to provide a better and more comfortable means of transportation for my family. And of course, I really liked the brand."

Li says when it comes to buying premium cars, foreign brands are his favorites. According to a Nikkei report, the number of luxury vehicles sold in China last year rose 17% year-on-year, accounting for almost 90% of the leading premium brands' global sales growth.

DANIEL ZIPSER SENIOR PARTNER, MCKINSEY & COMPANY "Premium car brands have outperformed the overall car market, have grown double digit over the last years, and even this year where the overall market is softer, the premium car brands are still showing healthy growth in the first half of 2018."

And with import tariffs falling to just 15 percent on July 1st, such growth could take off further.

XU MENGQI SHANGHAI "It's not hard to understand why China has such a big appetite for luxury cars. The country's fast growth over the past several decades has given rise to an upper and middle class that are looking for ways to signal their newly acquired social status. However, for today's younger generation of consumers, such a love affair for brand-name products has come to mean something different."

WANG YAN, EXECUTIVE VICE PRESIDENT PR & CORPORATE COMMUNICATIONS, JAGUAR LAND ROVER CHINA "They always wanted to have the coolest, latest and also best technology. This is something very different, and this is also why the Chinese automotive industry really now has been in the upfront of the future mobility, like the connected car, autonomous driving, and also electric technology."

DANIEL ZIPSER SENIOR PARTNER, MCKINSEY & COMPANY "If you talk about electric vehicles, more than half of the global EVs sold are sold here in China, and out of that half, more than 90% actually are local brands. So you do see industry disruptions, you see new players emerging, and that's a big threat. At the same time that's a big opportunity."

And it's an opportunity that China says it will share with the world. But to capture such an opportunity, innovation has to be speedy, even for premium brands. XMQ, CGTN, Shanghai.