China demand for luxury rides slowing, but the world’s new rich can make up for it image

While China sees demand for luxury and ultra-luxury rides slowing amid an economic fragility and the government’s run down of graft and conspicuous consumption, there are other markets that automakers turn their attention to.

For example, they could try Kazakhstan, even though the average person there only has $330 a month to live on. But thanks to massive oil and metal resources, the former Soviet republic has a growing wealthy class that lures in such brands as Rolls-Royce, Bentley and Maserati to the pot-holed streets of Almaty, the country’s largest city. Actually, the central Asian country has outperformed neighboring Russia in terms of orders for Bentley’s upcoming sport utility vehicle, the Bentayga. With China slowing to more mature growth levels, countries such as Kazakhstan and Azerbaijan represent the next conquest for the manufacturers of the world’s most pricey rides. Consumer interest for luxury vehicles in these frontier markets is expected to jump at least 9 percent each year through 2020, compared with about two percent in the US and Europe, says a forecast from IHS Automotive.

For Rolls-Royce for example, four of the six new dealerships opened last year were established in emerging markets: Azerbaijan, Cambodia, Mexico and Kazakhstan. “We do see demand” in such markets, comments Peter Schwarzenbauer, the BMW AG management board member responsible for Rolls-Royce. “That’s why we’re going there.” Naturally, such small avenues won’t be able to replace China, where luxury demand is predicted surging six percent per year over the next half decade as it remains the world’s largest car market and the second biggest in terms of upscale vehicles.

Via Bloomberg