From Altos to Benzes: Chengdu locals trade up
Luxury vehicle sales up following quake: analysts
Chengdu was once called “Alto City” because the small Suzuki hatchback ruled its streets in the 1990s.
But since then, it has grown into the country’s new luxury vehicle hub.
“People in this southwestern city have always been ahead of the times in terms of urban consumption,” said Jia Xinguang, an independent auto analyst based in Beijing.
“Once they can afford a car, they empty their wallets and even take out loans to be a driver.”
Song Gang first bought a Suzuki Alto in 1998.
“It was convenient to drive such a small car in the streets through the city, and it had low fuel consumption,” Song said.
“Among the few models, including Volkswagen Santana, Jetta and Citroen ZX, Alto was definitely the top choice for people in Chengdu at that time.”
After paying more than 80,000 yuan ($13,111) to buy the Alto, Song spent about 200 yuan to keep it running each month, which was “affordable enough.”
Moreover, he said, “It brought a lot of fun to my life.”
Though Song purchased a Buick Excelle to replace the Alto in 2002, later trading that for a Ford Mondeo and ultimately an Audi, the Suzuki Alto still holds a special place in his heart, he said.
“It’s a memory from that time,” said Song, who is now general manager of Chengdu Huasun Steel Structure Co Ltd.
Jia, the industry analyst, said: “Unlike people in other cities, Chengdu locals bought cars only to make life more enjoyable. That’s why the city saw a vehicle sales boom after the disastrous 2008 Wenchuan 8.0-magnitude earthquake in Sichuan province, especially in the luxury vehicle sector.”
He Liang, a 32-year-old traffic officer, is an example. He purchased his first car, a Hyundai Verna in 2009, after he relocated from Panzhihua city to Chengdu.
“Were it not for the quake, I would have postponed my plans to buy a car for at least five years,” said He.
After seeing so many serious quake-hit areas and witnessing many personal tragedies, He said that people in Chengdu, including himself, regarded money as much less important.
“Thus, the vehicle and real estate sales boom after the quake makes sense. People here just want to have as much fun as possible today and not pay much attention to or worry about the future,” said He.
Bjorn Hauber, executive vice- president of sales and marketing at Beijing MercedesBenz Sales Service Co, recalled participating in the Chengdu Motor Show three years ago. He said he was surprised to see three Mercedes-Benz SLKClass sports cars whistling by in the 15 minutes that he stood waiting for a shuttle to the exhibition center.
“I was deeply impressed by the local residents’ spending power for such a niche car,” Hauber said.
Potential
Seeing more market potential in Chengdu, the German luxury car producer inaugurated its regional office for operations in the western region in Chengdu last June.
“Over the years, cities in western China, such as Xi’an and Chengdu, have witnessed dramatic growth and changing lifestyles that demonstrate the region’s huge market potential,” Hauber said.
“Although the region now contributes 15 to 20 percent of our overall business, it’s more interesting that we see the highest growth rates in the western China markets, led by the two cities,” he said.
Now Mercedes has seven dealerships in Chengdu and plans to further expand to the neighboring lower-tier cities.
Mercedes’ rival BMW opened its largest 5S store in Asia in the city this June. It had only one dealership in Chengdu before the quake.
The top-tier vehicle brands, such as Rolls-Royce, Maserati and Ferrari, have all established a foothold in the city to find more business potential.
The arrival of premium brands, and local enthusiasm made Chengdu a new luxury vehicle hub in China, following Beijing and Shanghai.
No one could imagine that Chengdu has been the largest single city market for Volkswagen’s premium model Phaeton since 2008.
Statistics show that in 2012, passenger vehicle sales in western China, led by Chengdu, reached 3 million units.
The 25 percent average annual growth seen in the city during the past five years by far outpaced growth in the market overall.
Lang Xuehong, a senior auto analyst with consulting firm Sinotrust said that she believes the western market, led by Chengdu, will give even more momentum to luxury vehicle sales due to market saturation in the coastal cities and purchase limitations for vehicles in big cities like Beijing and Shanghai as well as the potential for more metropolitan areas to follow suit. Contact the writers at lifangfang@chinadaily.com.cn and pengchao@chinadaily.com.cn