“ My dad drives an S-class and my husband a C-class. therefore when my dad asked me what I wanted for a marry endow, I picked Mercedes-Benz excessively, ” recalled the 29-year-old Chen, who has an MBA academic degree and goes by the English list of Helly. “ You know, girls of my age fondness sports car these days. I kind of hesitated between SLK and E350, but I went for the latter because the SLK is much besides showy. ” Chen, who hails from the bantam but affluent city of Cixi in easterly Zhejiang province, not entirely reflects China ’ s burgeoning affluence, but she and others like her represent a newly course — full-bodied consumers far from the major metropolitan centers. And luxury carmakers are racing to follow the money. Cixi, a fifth the size of Shanghai but with an average personal wealth on equality with mainland China ’ mho fiscal capital, is among a batch of smaller cities that mark a new competitive frontier for top global lavishness car sellers. The city is known for its entrepreneurs, with about a one-third of families owning their own businesses. Chen ’ s founder made his money manufacturing magnets. Audi, BMW and Lexus have all staked their claims, setting up showrooms around the outskirts of Cixi, about two hours drive south of Shanghai. Jaguar and Land Rover besides reportedly selected a web site in the vicinity. “ It ’ s the absolute right thing to do for the carmakers because the market has been expanding, ” said Klaus Paur, managing director of greater China at diligence consultancy, Synovate Motoresearch. “ Historically, it ’ s the boastfully cities and the coastal belt. But now rich people are not entirely in tier 1 and tier 2 cities, they are in tier 3 and tier 4 cities ampere well. ”
SELLING TO MINERS AND HERDERS
The shift to smaller cities started two to three years ago, but gathered pace in 2010 as Beijing ’ s massive economic stimulation plan spurred car purchases and helped create a crop of nouveau riche in the hinterlands. official worries about China ’ s traffic-clogged major cities have helped. Cities such as Beijing and Shanghai have made it harder for residents to buy cars. Buying a car in Beijing, for exemplar, is alone possible for those who win a monthly car registration lottery. Statistics provided by J.D. Power and Associates show that closely 60 percentage of luxury car sales came from tier 1 regions in 2004, including Beijing, Shanghai and Guangzhou. That share is now a little more than 50 percentage. That means more sales in smaller cities like Yulin in Shaanxi province, Shaoxing in Zhejiang, and Erdos in Inner Mongolia. Erdos, once a rugged outpost on China ’ s northern grasslands, is now a major market for Tata Motors ’ Jaguar and Land Rover, according to the party. Range Rover, the top telephone line of the Land Rover family and priced deoxyadenosine monophosphate much as $ 518,000, has a special appeal to the descendents of mongolian herdsmen, some of them newly rich from the mine businesses flocking to the region. “ We bumped into a Range Rover or Land Cruiser from fourth dimension to prison term when we drove around the city, ” said Shawn Li, a Beijing-based IT solution coach, after returning from a week long-trip in Erdos. “ even the parking set of a three-star hotel we stayed in was full of fancy cars and that made my jeep Compass look shabby. ” Another coal mining city in the province of Shaanxi, Yulin, is a key battlefield for luxury car makers such as Audi and BMW.
Audi opened a franchise in Yulin at the end of 2009, BMW followed courtship less than a year subsequently. Business has been booming. “ I can move five or six cars every day on average, ” said Xiao Zhang, an Audi dealer in Yulin. “ There are many expensive and super expensive cars here, Audi, Mercedes, BMW, Lexus, Jaguar, Rolls-Royces, Porsche, you name it. ” Choi Duk Jun, vice president of Mercedes-Benz in China, said that when he first base came to China five years ago, alone 60 outlets handled cars with the distinctive three-point stars on the front. nowadays there are more than 180 such outlets with 12 percentage in little cities that have combined annual sales of at least 1,000 lavishness cars of respective brands. The german car godhead aims to double the issue of its outlets by 2015, with a stern of them in smaller cities. From January to September, Mercedes-Benz sold 139,400 units in China, up 38 percentage on an annual basis. BMW sold 177,522 units, up 45 percentage. China ’ s overall passenger car market climbed 6.4 percentage during the time period. Xu Dizhen, owner of Mercedes-Benz franchise in Cixi, already plans to add two more outlets nearby in Ninghai and Yuyao, two adjacent affluent cities. To plan for future expansion, Choi closely monitors new car registration in 280 little taiwanese cities. Rivals are besides on the move. Audi plans to expand its franchise network in China to 400 by the end of 2013, up from 174 dealerships late last year. Volvo Car, now owned by China ’ s Geely group, is adding over 100 outlets by 2015, targeting lower-tier regions. “ We are not adding more dealerships in Beijing, we are not adding more dealerships in Shanghai. Tier 2 and tier 3 are more or less what we are doing at the consequence, ” said Richard Snijders, drumhead of Volvo ’ s China sales arm .
To be sure, bringing expensive products and venturing into humble cities comes with its challenges. Those include outpacing or misjudging market trends deoxyadenosine monophosphate well as bumping up against manpower constraints. In finical, dealerships struggle to find qualify technicians who can earn 200,000 to 300,000 yuan per annum. “ It ’ s a trouble in bigger cities but it ’ s even tougher in smaller cities, ” said Mercedes-Benz ’ s Choi about finding mechanics and technicians who can service high-end cars. “ There is a war for not only for the customers, but besides for talent to work at the franchise, particularly on the after-sales side. ” Most lavishness car makers first came to China with their flagship models, appealing to an older generation and a little class of well-connected and affluent customers. But regular emergence in the world ’ mho second-largest economy has radically changed lifestyles of the younger coevals who seek out luxury goods that announce their new status. lavishness automakers are tripping over each other to appeal to this up fluid and style-conscious class of consumers. Audi is expanding its China portfolios to include the locally-made Q5 SUV in addition to its overseas-made models. Mercedes-Benz has introduced A-class and B-class cars to China and may start making GLK SUVs in its adeptness in Beijing next class. BMW has besides been bringing in smaller, sportier models to beef up its portfolio.
“ It ’ s an amazing commercialize, ” said Choi. “ Never again will the automotive diligence experience this kind of growth. ” $ 1 = 6.351 Chinese yuan Additional report by Tina Qiao in BEIJING ; Editing by Don Durfee and Matt Driskill Our Standards : The Thomson Reuters Trust Principles .