McKinsey Report Says: China To Beat U.S. In High End Cars

Bertel Schmitt
by Bertel Schmitt

Bloomberg, which is relentlessly covering the luxury end of the car market for its high net-worth subscribers, has the distressing news that Chinese will buy more luxury cars than Americans – by 2016, that is.

This will happen if the Chinese do as a McKinsey study says. It says that “China premium car sales will probably surpass the U.S. as early as 2016 and equal that of Western Europe by 2020, driven by rising incomes in the world’s second-largest economy.”

Demand for luxury vehicles in China is expected to more than double by 2020 to 3 million from the 1.25 million cars sold last year, the study says. McKinsey sees deliveries of premium cars reach 2.25 million by 2016.

This is good news for German makes, led by Audi, which currently own “about 80 percent” of the segment in China, McKinsey says. It is also good news for Cadillac, Lincoln, Infiniti, Lexus, et al who want a slice of the juicy pie.

But remember what Susan Docherty said:

If a luxury brand is successful in Europe, whether that brand is Chanel or Prada, or Mercedes or BMW, people in parts of Asia look to see what Europeans validate as true luxury.”

If that’s true, then the doubling of the higher end market in China probably will benefit those other Germans, Docherty, said it, BMW and Mercedes.

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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  • Mike978 Mike978 on Mar 04, 2013

    Wow Audi having an 80% market share. That is not going to be sustainable long term given the number of competitors who want a slice of the pie. 50% seems generous going forward. Still very good for the VW group.

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    • Elusivegene Elusivegene on Mar 05, 2013

      It's not Audi solely, ABB jointly accounted for near 80%.

  • Lowsodium Lowsodium on Mar 04, 2013

    Thats assuming Chinas real estate bubble doesnt bust spectacularly before then.

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    • Blowfish Blowfish on Mar 05, 2013

      @George Herbert is as difficult to ask whether the chicken or the eggs comes first. MK , EU and US of A's economies are all intertwined, neither one will do well if the other is sputtering. one thing we did saw as GM didnt went totally tits up after the re-organization as GM sold a good amount of cars in MK. "B) fear of China’s residential real estate bubble bursting badly;" that all depends on how much these folks have leveraged their deals. Too little equity will not weather any storm at all. "If Foxconn’s rehiring after Chinese New Year is down, there remain hundreds of thousands or millions of empty premium residential units" the folks who work at Foxconn will never afford those premium res units anyways. should they be out of work they will have to go back to plow the fields again. How well FC will do isn't that depends how well the west buy the next new gen apple I products? thats why most of us pray to God bless America.

  • Volt 230 Volt 230 on Mar 04, 2013

    Anyone surprised by this has been keeping his head in the ground like an ostrich, the transfer of wealth West to East has been going on for so long that this is just the tip of the iceberg, it is happening with things like wine. art and other things that ultra rich people like to own.

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    • Tatracitroensaab Tatracitroensaab on Mar 05, 2013

      This article and this comment are a part of a western attitude that disgusts me. China has a billion people, it should be buying A LOT more luxury cars than Americans there is nothing wrong with the economic rise of china -- it and the rest of the developing world are catching up to the west, as they should. It should be noted that for most of human history, the dominant power has been china, mostly because it's in a very fertile part of the earth and has thus always been home to more people than almost anywhere else. The west only ascended in the last 500 years with the advent of global trade, which Europe was able to take the lead in, and the gap only widened thru industrialization. Now the rest of the world is catching up. Demagogues like to stir people up by pretending that this is all zero sum -- that more luxury cars in china, or anything else, comes at the expense of Americans. This simply is not true. While yes the world has in theory finite resources, in practice one country's rise to prosperity is a win-win game. China gets rich, great, now we have someone who can use our services, buy our products, adapt our ways, etc. etc. and vice versa

  • Blowfish Blowfish on Mar 04, 2013

    or 30 yrs ago folks in old blighty wasn't thrilled about harrods changed to harab!