x Abu Dhabi, UAE Thursday 20 July 2017

Prestige car market proves a tougher nut to crack

Just as Chinese luxury fashion and accessories brands have sometimes struggled to make headway, so local prestige car makers have faced a difficult time in their home territory.

Just as Chinese luxury fashion and accessories brands have sometimes struggled to make headway, so local prestige car makers have faced a difficult time in their home territory. The Chinese car market grew 52 per cent in the first six months of this year compared with the same period last year but at the premium end of the market it was German manufacturers that reaped the richest rewards. Audi, BMW and Mercedes achieved sales increases of between two thirds and 120 per cent.

John Zeng, an automotive analyst, has a stark assessment of the situation facing their Chinese competitors. "The answer is quite clear. I don't think in the medium and the foreseeable future any Chinese brands can compete in the luxury market," he said. To illustrate the point, he cited the HQ3 model, produced by the Chinese luxury brand Red Flag, or Hong Qi, part of First Automobile Works and one of the country's largest car companies.

"They've only managed to sell 40 or 50 units a year. It really doesn't make any sense," he said. By contrast, Audi shifted 110,000 cars in China in the first six months of this year. Like BMW and Mercedes, Audi has production plants in China - Audi's are operated in partnership with FAW - indicating that the lack of success of Chinese luxury cars is a brand-related phenomenon and not a result of a bias against Chinese-manufactured vehicles.

@Body-Infobox2:Even South Korea's Hyundai and Kia, along with Buick, owned by the US company General Motors, have found it hard going in the luxury segment. The Buick Park Avenue, for example, a car better known in the UAE as the Chevrolet Caprice, has not sold in large numbers, according to Mr Zeng. @Body-Infobox2:"In terms of luxury brands, it's highly focused on the European brands or the Japanese brands trying to catch up, like Lexus," he said, adding this explained the acquisition of Volvo by the Chinese car maker Geely.

@Body-Infobox2:Despite the hurdles, FAW is not giving up on the premium sector, having announced earlier this year it was spending 933 million yuan (Dh504.3m) to develop a new luxury saloon, the Besturn B90. The company hopes to make 60,000 of them a year. business@thenational.ae