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Premium brands: switching their allegiance to China and India?

Emerging market likes China and India could spell good news for UK dealers as stock can be diverted away from mature markets over to Asia, which could help margins and reduce stocking costs.

The claim comes from a report by Les Glassock & Associates examining how Audi and Porsche grew from a standing start in China and what their aspirations are for India.

Audi’s biggest export market was China in 2007, Porsche aren’t far behind with 4% of its cars going to China. BMW sold 51,000 cars in China last year and is expecting to sell 1,000 units in India this year.

The economies of China and India have been growing at around 10% or more for a decade. Their car markets have been growing even faster and, in the case of China they already have a substantial premium and luxury car market, over 260,000 in 2007 and expected to double in five years.

India, whose market development is probably a decade behind, is estimated to grow their premium and luxury segment to over 100,000 by the same time.

Fuelling this phenomenal growth is the creation of “high” and “ultra high net worth individuals”. China has almost 900,000 people worth £500,000 or more, while India has 123,000 according to the recent Merrill Lynch “World Wealth Report, 2008”.

Audi invested earlier than most, back in 1988, recognizing it had more chance of establishing leadership in an emerging market, instead of battling with BMW and Mercedes-Benz in established markets.

In the luxury segment, Porsche have taken leadership, based on selective investment in quality dealers.

  • To download Les Glassock & Associates PDF report on the Indian and Chinese market click here.
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