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Last Updated: Friday, 26 March, 2004, 00:00 GMT
China learns to travel in style
By Stephen Vines
BBC World Service reporter in Hong Kong

Maybach
Mercedes is said to have sold 3 Maybachs in China
A few years ago there was just one luxury car being produced in China.

It was the Red Flag limousine, reserved exclusively for the use of senior government officials.

The Red Flag was a Soviet-style steel mill on wheels.

Refined it wasn't, impressive it was.

There are still a few of these dinosaurs around, but luxury car buyers these days are drawn from the ranks of China's new rich, whose propensity towards ostentation knows few limits.

Recent estimates suggest that some 95,000 luxury cars were sold in China last year, with prestigious European marques leading the way.

German cool

The pioneer luxury car maker in China was Germany's Mercedes Benz, which a few short years ago may have thought that it had the market to itself.

But its arch-rival BMW has now burst onto the scene, shifting almost 19,000 vehicles in 2003 - three times its total for the previous year, and twice the number Mercedes managed to sell.

However, a third German manufacturer, Audi, part of the VW group, is the real market leader, with its A4 and A6 models.

They're classed as luxury vehicles in China, although they might be in a lower category elsewhere.

Audi A4
The Audi A4 is selling well in China
But these are big, well-fitted cars nonetheless, and Audi managed to double sales last year, shifting more than 63,000 vehicles.

US challenge

The floodgates are now open, and practically everyone in the luxury car market wants to get into China.

General Motors has a plan to bring in Cadillacs from the US.

Meanwhile, Ford which owns the prestigious British-made Jaguar and Land Rover brands, as well as Volvo from Sweden, is definitely interested in bringing more of these cars to China.

The firm is also thinking about importing its American prestige Lincoln range.

Perhaps surprisingly, Japanese carmakers are lagging behind their US and European competitors in this game.

But Toyota's upmarket Lexus brand already has a toehold, and will soon be part of a marketing drive aimed at trebling sales.

You might think all this would be enough to tip China's fledgling luxury car market close to saturation point.

Blue-blooded

But the most exclusive, ultra-luxurious car marques of all take a different view.

Rolls Royce, still for many the last word in upmarket motoring, has opened three showrooms in Chinese cities.

And its rival Bentley, which took 80 orders for its Continental GT model at the last Shanghai motor show, thinks it can do even better.

Meanwhile, Ferrari and Maserati from Italy sold around 100 cars in China last year, and expect to outstrip this comfortably in 2004.

And three Chinese orders have apparently already been taken for one of the most expensive cars in the world, the Maybach, made by Mercedes.

Moreover, China is set to reduce imported car quotas and tariffs, a move which is sure to boost demand for luxury European cars even further.

All the carmakers need are rich customers, and there seems to be no shortage of people with cash.

So while there are reports of overcapacity in the mass car market, the luxury end of the sector is facing a quite different problem: how to get its cars to China fast enough.



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