Luxury Car Makers Brace for Slowdown in China

10 years, 11 months ago - 23 April 2013, Wall Street Journal
Luxury Car Makers Brace for Slowdown in China
SHANGHAI—BMW AG said it expects slower sales growth in China this year as premium-car makers grapple with a slowdown in economic growth and intensifying competition in one of their most lucrative markets.

The German auto maker said at the Shanghai auto show over the weekend that it expects China sales growth in the upper single digits. BMW’s sales in China increased about 40% last year to roughly 326,000 vehicles.

Ian Robertson, management-board member responsible for sales and marketing, struck a more cautious note, saying at the auto show that he doesn’t expect growth rates as high as those seen in the past.

“The market is maturing somewhat,” he said. “We’re expecting normalizing growth figures in coming years.”

Some industry watchers say BMW’s conservative tack reflects recent changes in China’s business environment, including a slowdown in economic growth and a greater emphasis on austerity by newly appointed President Xi Jinping.

Yet some premium-car makers say they still aren’t feeling the effects of the austerity drive, and a recent push for government officials to ride in Chinese-brand vehicles.

“We are very conscious of it, but we don’t see a big impact,” Hubertus Troska, Daimler AG’s board member responsible for China, said Saturday. Daimler owns the Mercedes-Benz brand.

“Certainly we have seen more dynamic times in China, but still see decent growth,” Mr. Troska said. He said he is “cautiously optimistic” about market prospects, saying he expects to sell more than 300,000 cars in China in 2015. Mercedes-Benz will add 75 dealers in China by the end of 2013 to the current 262, he said.

Mr. Robertson’s comments were at odds with analysts’ more robust sales-growth projections for China’s premium segment. IHS Global Insight, for example, is forecasting 17% growth for the premium segment in the country this year.

The BMW official’s comments suggested the country’s luxury-car market could slow even more than expected just as more car makers jostle for a bigger piece of its growth.