China Saves Bacon Of Luxury Car Makers

Bertel Schmitt
by Bertel Schmitt

It’s a strange world. Europeans are changing their already small cars for tiny ones. Manufacturers fall over themselves building ever smaller and cheaper cars. In the USA, small cars are suddenly big. Ford’s analyst George Pipas says that this year, small cars accounted for 21 percent of all U.S. vehicle sales. By 2013, Pipas predicts that compact cars, subcompact cars and crossover vehicles built off small car platforms will account for 36 percent of total new vehicle sales in the United States. Car executives that still have a job bemoan the times where big cars meant big profits.

A new frugality is rampant on the globe. Makers of luxo-barges, such as BMW and Mercedes are in big doo-doo.

They would be in much deeper excrement, would it not be for – China. For November, Mercedes, Audi, and BMW all reported huge increases in car sales to China. Mercedes-Benz said it posted record sales in China. China has become the fourth-largest market for Mercedes. A total of 8,700 passenger cars were delivered in China in November, nearly three times the number sold in the same month a year ago. Sales of Mercedes-Benz vehicles to other former poorhouses are up also: Up 81 percent in Brazil, up 25 percent in India.

Audi sales in China more than doubled to 16,503 cars in November. Audi thinks, China will pass Germany as its largest market within two or three years. In November, BMW sold 8,470 cars in the Middle Kingdom, up 40 percent.

BMW and Mercedes are moving more production to China. BMW is building a second plant with the Chinese joint venture partner Brilliance. Daimler also announced that they will triple their Chinese capacity.

Yale Zhang, a senior Shanghai-based analyst with U.S. consulting firm CSM Worldwide, said to the Wall Street Journal he expects China’s premium-car segment to grow 26 percent to 315,000 vehicles next year.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • CRacK hEaD aLLeY CRacK hEaD aLLeY on Dec 16, 2009

    I read recently that MB sold 2.435 cars in Brazil between January and July this year. 1.673 were sold last year during the same period. So, yes, there is an increase but these numbers are, what, equivalent of how many cars were sold in Los Angeles alone in a couple of months? The luxury car market in Brazil is nothing compared to China. Bankers in São Paulo, artists and soccer players in Rio and politicians in Brasilia. And that's it except for a few soy and sugar cane farmers here and there. And they live in São Paulo anyway. MB has a factory in São José dos Campos in São Paulo. It's been there since the early 50's building all the MB trucks and buses you see everywhere. They own the truck chassis market & this is their bread & butter. THEN there is the fiasco few talk about, their plant in Juiz de Fora, near Rio. This semi-defunct plant is a reminder of the DaimlerChrysler Halcyon days. It is a three-shift factory with a capacity of 70K + cars/year, built in '99 to assemble the A class for sale in Brazil and the rest of the world. And sell it did not. I think they had visions of MB doing what VW did in the 50's with the bug in Brazil and Mexico. Who knows. The investment is probably a big blob or red ink in someone's excel spreadsheet in Germany but it is quite a sight when you drive from Rio to Belo Horizonte on the main highway BR-40. They keep the tall grass at bay, but ask any waiter at any of the myriad of local restaurants built to cater to the German hordes earlier in the decade and they will tell you business is dead and has been dead for years. For a while last year they built the C class CLC model on a CKD basis for export. Everything was shipped from Germany to Brazil... uncrated and assembled into a car and then left to cook on a open lot under the tropical sun and rain waiting for a car carrier to be taken to the port to be shipped back to...Germany. Weird way to build a German car for the European market if you ask me, but I'm no expert in logistics and costs. They must know better.

  • Autobraz Autobraz on Dec 16, 2009

    Robstar, people are getting relatively richer as the Real has increased in value against the Euro. You will have to search how much is the change; against the Dollar it was around 25%. Also the world economic crisis didn't hit us as badly (not all for many).

  • Kwik_Shift_Pro4X Making it even more unaffordable and less desired. See what happens.
  • MaintenanceCosts Has the EU indicated the basis for treating different OEMs differently?
  • Dartman Frankly my dear I don't think about it much. I'm not an insurrectionist, drug dealer, sex offender or criminal of any type. My experience with insurance companies is that once you pass the age of 35 and become a regular bill paying customer with multiple lines of coverage such as auto, home, personal items, EO etc unless you drive like a maniac and have multiple citations, claims etc. you are going to receive the best rate possible and not have to deal with rate hikes and cancellations. I've been with same carrier for 40 years; yes they have made a ton of money insuring me but that's the price of success. They have plenty of information, including personal info that I willingly provided i.e DMV records, physicals for life insurance, home inspections etc. Let's face it, we all subsidize the under 35, poor credit, non-home owning high risk drivers (primarily male). If you fit any of the above, I don't blame you for being paranoid about your "privacy". If you can't do the time, or pay the price, then don't do the crime and think twice. If you are worried about being embarrassed about being caught publicly in a personal moment, don't do it. In the words of your Mother "always wear clean underwear".
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  • FreedMike This is a good series of articles. It's well worth your time to check any of your apps to see who's selling your info, and to whom. When it comes to driving, any app that tracks your location is one you need to opt out of sharing with. That includes Google...and after reading this story, I'm opting out of location sharing with MyRadar (which is actually a very useful CarPlay app).