Daim­ler to give new lux­ury baby li­mou­sine glitzy de­but

The Star Early Edition - - BUSINESS REPORT INTERNATIONAL - Sa­muel Shen and Kazunori Takada

DAIM­LER will give its new lux­ury baby, the Mercedes-May­bach li­mou­sine, a glitzy world de­but at this week’s Guangzhou auto show, even as an­a­lysts warn the end is nigh for China’s 10-year high-end car sales boom.

The scale of the world’s big­gest auto mar­ket means the Ger­man firm and peers like Jaguar Land Rover can­not ig­nore it. To cut costs and cush­ion po­ten­tial dis­counts as lux­ury de­mand cools, they are start­ing or ex­pand­ing pro­duc­tion in China.

Re­spond­ing quickly to chang­ing con­sumer pref­er­ences since Pres­i­dent Xi Jin­ping’s anti-ex­trav­a­gance cam­paign be­gan two years ago is key for lux­ury car mak­ers. IHS Au­to­mo­tive ex­pects pre­mium car sales growth will slow to 5 per­cent by 2018 from an av­er­age an­nual growth rate of 30 per­cent over the past decade.

“We want to go for a sus­tain­able growth, growth with qual­ity. It’s not just a vol­ume game,” Ralf Speth, the chief ex­ec­u­tive of Jaguar Land Rover, said last month in Chang­shu, where the Bri­tish company opened its first over­seas plant.

Lo­cal­is­ing op­er­a­tions could help lux­ury op­er­a­tors tar­get fast re­sponses to chang­ing trends. It could also help them avoid heavy im­port du­ties and price their cars more com­pet­i­tively.

In­ter­est among for­eign firms in sell­ing up­scale cars in China shows no sign of abat­ing even as eco­nomic growth slows to the weak­est pace since first-quar­ter 2009. Last month, Ford launched its pre­mium Lin­coln brand, while Volk­swa­gen plans to in­tro­duce lux­ury cars next year.

But the mar­ket for ul­tra­lux­ury cars, de­fined by con­sul­tancy as those sell­ing for more than 2 mil­lion yuan (R3.6m) apiece, has dropped sharply.

AT Kear­ney’s An­dreas Graef said down­siz­ing was spread­ing to the ul­tra-lux­ury seg­ment. – Reuters

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