Tension over Diaoyu Islands drives German automakers' success

BMW Group followed with 27,000 deliveries, almost 55 percent higher than the previous September. Its accumulated sales increased by 32.7 percent to 219,800 from January to September.

BMW's sister brand Mini recorded 2,631 sales in September, double that of September last year. It has delivered a total of 17,256 cars in China since the beginning of the year.

Another major luxury brand, Mercedes-Benz, didn't score as high as its competitors, but still performed well enough to turn the heads of most other brands. The brand sold 16,806 cars in September, up 10 percent year-on-year. The sales sheet shows it delivered 144,530 cars during the past nine months. If the Smart brand is included in the Mercedes family, last month's sales rise to 18,145.

CAAM says that for the past three years, these luxury brands have been enjoying an annual growth rate of more than 40 percent - a figure unheard of in Europe or the United States for decades - and are apparently still riding this favorable trend.

The disastrous performance of their Japanese competitors last month further helped German luxury brands to expand their territory in China.

Figures released by Toyota, the biggest Japanese automaker, show that its sales slumped by 40 percent to around 50,000 units in September from last year's 86,000.

Japanese high-end brands, such as Lexus and Infiniti, conceded market share to their German competitors, as Japanese-goods were boycotted in major cities.

"The combined market volume of Lexus, Infiniti and other high-end Japanese brands is about 100,000 units every year," Zeng says. "The sales surge of German brands was partly due to the retreat of these Japanese brands."

Even without the tension, Chinese people's affection toward German luxury cars is unlikely to fade away in a short time. Indeed, for the time being, German brands control more than 80 percent of the luxury car segment.

Richard Wang, marketing manager of China Automobile Trading Co Ltd, says German luxury brands have several qualities that fit into the Chinese market.

"Besides their good quality and reputation, these brands are launching low-emission and fuel-efficient vehicles which respond to the Chinese government's policies to encourage greener vehicles," he says.

Driven by their great expectation for the Chinese market, luxury car brands are expanding their capacity in China. In May, BMW put a second factory into operation in the country, doubling its capacity to 200,000 units a year.

Zhang Xiaojun, executive vice-president of FAW-VW Audi's sales division, said at the end of last year that the company would introduce its entire range of products to China by 2015. Cadillac also revised its localization plan at the beginning of this year, and decided to build a new factory in China to produce vehicles catering to Chinese customers' preferences.

Also in May, Dongfeng Motor Group and its joint-venture partner Nissan Motors confirmed that they would produce Infiniti cars in China in a factory in Hubei province. The product will roll off the assembly line in 2014.

According to China IRN, a consulting company based in Shenzhen, the high-end car market was not the only one to achieve significant growth, as the supercar segment is booming as well. Super premium brands such as Porsche, Ferrari and Rolls-Royce all boasted growth rates of more than 60 percent.

LMC Automotive predicts that there is still great potential for luxury brands in China. A report from the company shows that around 1 million high-end cars were delivered in China last year, 7 percent of the passenger car market, while the average level in mature markets is 10 percent. In Germany, the figure is as high as 30 percent.

The company estimated that the sales volume of luxury cars would double to around 2 million units by 2015.

wangchao@chinadaily.com.cn