Report details luxury cars in China

Source:Global Times Published: 2014-12-9 20:08:02

A young woman (right) sells scarfs to passerbsby from her luxury sports car in Jinan, Shandong Province, on December 6. Photo: CFP

On November 23, a 500-meter-long wedding fleet comprised of 30 Rolls-Royce Phantoms, headed by a red Ferrari and eight deluxe motorcycles, took to the streets of Tangshan, Hebei Province. The total estimated cost of this display of opulence: over 200 million yuan ($32.49 million), Chinese Business View reported on November 28.

While pedestrians and netizens marveled at the gorgeous wedding  ceremony, the luxury cars' mere presence stirred speculations about the identity of their owners.

In China, luxury limousines are often connected in the public mind with the nouveaux rich, ill-gotten gains and ostentatious displays of wealth. This portrait was recently fleshed out by a report on luxury car brands released by wealth research firm Hurun Research Institute on November 26.

Chinese luxury car owners are young, highly educated and have high incomes. Their average age was 33.5 years old, 76 percent of them were male and some 10 percent had spent at least three years overseas. The annual family income of the car owners was 1.05 million yuan on average, according to the report.

Meanwhile, 80 percent of the respondents had heard about negative public perceptions of luxury car owners.

There is much that is seemingly contradictory about successful Chinese people, said Rupert Hoogewerf, chairman and chief researcher of Hurun Report. They want to keep a low profile while purchasing luxury cars to show their pride in their own achievements, he said, adding that his report is meant to help people better understand car culture in China, Xinmin Weekly reported on December 3.

Analysts said a number of Chinese own cars, but have little idea how to best care for them.

Profile of a car owner

China now has 1.09 million individuals with a personal wealth of 10 million yuan, and 67,000 super-rich whose personal wealth exceed 100 million yuan, according to the Hurun Wealth Report 2014.

Undoubtedly, the purchasing power of this group of people is extraordinary, Xinmin Weekly said.

Citing the sales of Audi and BMW cars as examples, Xinmin Weekly reported that more than 400,000 have been sold respectively in China, accounting for 31 percent and 24 percent of their global sales volume.

McKinsey&Company predicted in its 2013 report "The Future of China's Premium Car Market" that "China may overtake the US as the largest premium car market as early as 2016, when sales could reach 2.25 million units."

With the booming luxury car market in China, the Hurun Research Institute surveyed 800 car owners of eight brands in 10 cities in 2014, focusing on Audi, BMW, Mercedes-Benz, Lexus, Volvo, Land Rover, Cadillac and Infiniti.

The survey found that Mercedes-Benz owners had the highest income and Infiniti the lowest. Volvo owners were the best educated, Land Rover owners the worst. Audi had the most owners working as government officials, while Land Rover attracted the most entrepreneurs.

Among the eight brands, Audi owners have the most defined image. The survey found that Audi owners were perceived as mature, experienced government officials and also considered themselves to be white-collar workers.

Audi dominated the official car market in China from the early 1990s up until 2005, when the Chinese government required more than half of its cars procured to be produced by indigenous automakers, according to The Time Weekly

Land Rover and BMW drivers were seen mainly as "nouveau riche, young 'second-generation wealthy' and show-offs." In particular, BMW cars were labeled "cars for mistress."

The Volkswagen Beetle, Mini Cooper and BMW were listed as the "favorite brands for mistress," automobile portal revealed in 2008.

Mercedes-Benz owners were seen as cultivated and successful businessmen, while Volvo drivers were believed to be "valuable members of society, low-key and family-oriented." Infiniti owners were seen as second-generation wealthy, film stars or people "who are biased in favor of good-looking [people or things]."

Behind automobile culture

Most domestic car purchasers have no clear-cut perceptions about brands, Zhou Zhan, an experienced automobile journalist, was quoted by Xinmin Weekly as saying.

"When my friends consulted me about choosing cars, they only told me their budget and asked me to provide some options," Zhou said, "They did not care about the culture behind the car brands. For instance, Cadillac symbolizes the American Dream for African-Americans, [a fact of which] Chinese car buyers are barely aware."

In addition, a lack of driving etiquette and road safety awareness have also contributed to an underdeveloped car culture, said Xu Xiangyang, deputy head of the China Association of Automobile Culture.

The Hurun report showed that 80 percent of respondents had heard about negative publicity surrounding luxury car owners. Among the luxury car owners who were aware of the public's negative perception of them, 90 percent cited reasons like drag racing and drunk driving as the most prominent reason, with drivers attacking people deemed the second-most important reason by 80 percent of respondents.

One widely-reported incident concerned a BMW owner, the son of a well-known military singer, attacking a couple during a traffic spat, threatening them if they went to the police, the Beijing Youth Daily reported in 2011. This may have been one of the reasons BMW's image was tarnished so badly, with 70 percent of respondents reporting a negative perception of the brand, according to the Hurun report.

Li Jie, a professor of Luxury Brand Research Center at Shanghai Jiao Tong University, explained that Chinese entrepreneurs made money so easily in the economic transition, while their self-cultivation failed to keep pace.

"Therefore, they resort to luxury cars, deluxe houses and they like to display their strength, through which they can further expand their business," Li said.

But he also pointed out that such mindset was common in developed countries when automobiles were first introduced.

China is experiencing the transition from a commodity-focused society to a society that stresses brands, so "we cannot expect of Chinese luxury car owners what we might expect of drivers in developed countries," Li noted.

Newspaper headline: Taking the rolls
Newspaper headline: Taking the rolls

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