While automotive executives are pushing for increased spending, output and better positioning in China – the world’s largest auto market – analysts warn that the country’s decade long car sales boom might be coming to an end soon.
But, as the scale of the market has grown beyond their wildest expectations (first among general sales, second when it comes to the luxury segment), automakers from Mercedes to FCA aren’t allowed to just ignore it. For example, Daimler AG has given its new luxury baby – the Mercedes-Maybach limousine – a double debut: it’s present on both sides of the world, at the Los Angeles Auto Show and this week’s Guangzhou motor show.
From Fiat Chrysler automobiles to Jaguar Land Rover, automakers are simply expanding or starting production facilities in the country – in a bid to better appeal to local needs and also dampen costs and mitigate potential discounts as demand slows down. While mass-market automakers are better protected, as the country’s rising middle-class still longs for new cars, after President Xi Jinping’s anti-extravagance campaign started two years ago the luxury carmakers need to move fast to avoid failure. Forecasters at IHS Automotive predict the premium segment might slow down from a 30% growth rate over the past decade to just 5% by 2018.