CAREFUL, NOISY! Lower volume before playing.
The Paris auto show opens its doors tomorrow to the press (sans TTAC, our suggestion to make a pilgrimage in a Dacia all the way from Rumania to Paris was inexplicably met with an “um, maybe another time,”) but the thoughts of makers of luxury cars are in China, where their party could be over.
Reuters boiled the China problem down to a simple sentence: “Premium-car buyers are showing signs of saturation.”
Sales of premium cars exploded in China over the last few years, along with the quickly rising numbers of the nouveau riche who needed to show that they made it. As that growth stops and people are scrambling for money, supply has overshot demand. Or so the theory goes.
“The Chinese have overconsumed premium cars in recent years,” Reuters cites Singapore-based Bernstein analyst Max Warburton. “Right now, we see a number of risks to sustained high profits from China.”
“Business will normalize,” hopes Friedrich Eichiner, CFO of BMW. IHS analyst Bin Zhu doesn’t expect the luxury-car boom to weaken substantially. What do you think?