Young and Rich: The New Luxury Car Buyer in China
The young man in his early 30's walked into the Jaguar Land Rover dealership in the upscale Pudong District of Shanghai and surveyed a new XF model.
This is the new face of the luxury auto buyer in China.
Young, rich and looking for a high-end car that makes a statement.
"The average buyer here in China is about 10 years younger than in the United States," said Ralf Speth, CEO of Jaguar Land Rover.
The youth movement in luxury autos in China is driving the upscale car market to record sales. Over the last ten years, luxury auto sales in China have grown 36 percent annually.
"These are people who are young and entrepreneurial and they have the affluence, so they want a car that shows it," said Speth
As the affluent of China have bought more high-end cars and SUVs, one thing is clear: they love the German auto brands.
The top three automakers are Audi, BMW and Mercedes-Benz.
Between them they are responsible for almost three out of every four luxury cars sold in China.
"China is the place to be," said Mercedes-Benz CEO Dieter Zetsche shortly after he unveiled the company's new compact luxury SUV, the GLA Class.
Zetsche says China is changing so rapidly it seems like a different country when he visits every three to four months. One other thing he's noticed, how young buyers now rule the market.
"It's not unusual to see a 30-year old driving an S-Class here. In fact, it's expected," said Zetsche.
China Replacing America
For decades America has been the most lucrative auto market in the world. It was not only the largest for the mass market brands but also for the luxury segment.
It's the reason BMW, Mercedes and Lexus have fought so hard over the last decade to win the title of best-selling luxury brand in the U.S.
These days that battle has spread to China which is now the second largest luxury car market in the world, with sales of 1.25 million upscale cars and SUVs last year, compared to 1.7 million in the U.S.
By 2016, China will catch the U.S. in luxury vehicle sales.
Forecasts now project the Chinese buying 3 million luxury cars annually by the end of the decade. By comparison, U.S. luxury sales by 2020 are expected to be 2.25 million.
This is why many believe China, not the U.S., has already become the most important market in the world for luxury automakers.
"The market in California ebbs and flows like any other market in the United States," said Michael Robinet, consultant with IHS Automotive. "But I think China is really looked at and earmarked as the luxury growth market for the next decade."