As the years of profiting from China’s growing appetite for hyper-luxury are almost at an end, automakers like Lamborghini are signaling a shift back to more traditional markets such as the U.S. and Japan.
China’s incredibly fast growing economy is starting to slow down to a more normal level, so concerns from carmakers like Ferrari and Rolls-Royce started to rise, as the country is no longer the driver of growth it was three years ago when it pulled the world out of recession. A slowing economy and a government push against lavish spending have undermined sales of luxury goods ranging from supercars to Prada bags and Bordeaux wines.
“Luxury carmakers are suffering, and a lot of high-class restaurants that serve expensive dinners are suffering too,” said Andreas Graef, a consultant at A.T. Kearney in Shanghai. “Clearly China’s millionaires and billionaires are more cautious of how they show off their wealth, from expensive watches to expensive liquors.”
The U.S. is currently the strongest market globally, and Chinese demand for luxury cars is unlikely to ever experience the kind of expansion it saw over the past several years. Chinese consumers were the world’s biggest buyers of luxury goods in 2012, accounting for 27 percent of industry sales, according to a McKinsey & Co. report in December. But mainland luxury sales growth may slow to 12 percent annually in the three years to 2015 from an average of 27 percent between 2008 and 2012, according to the report.
“The U.S. is really getting back on track and getting more important for us,” Lamborghini SpA Chief Executive Officer Stephan Winkelmann said in an interview in Tokyo. In China, “there is a slowdown in high-end luxury,” he said.
Lamborghini isn’t alone among ultra-luxury carmakers seeing a slowdown. Rolls-Royce CEO Torsten Mueller-Oetvoes said in April he’s no longer seeing “explosive” growth in China, though he’s still optimistic. The U.S. overtook China as the brand’s biggest market last year, when the maker of the $380,000 Phantom sold a record 3,575 cars globally.
Ferrari, the most profitable unit at Fiat, says it expanded North America sales 9 percent and Japanese deliveries by 28 percent in the first half. In greater China, by contrast, the automaker sold some 350 cars in the period, 50 less than a year earlier.
In Japan, where investors are cheering Abe’s push to bring the country out of more than two decades of economic malaise, customers wanting to buy the scissor-door Aventador must wait 12 months, and Lamborghini’s sales gained 14 percent through August, according to the Japan Automobile Importers Association.
) - Tuesday, October 1st, 2013 - filed under Industry
. Image credit: .
Discuss: Luxury automakers going back to traditional U.S. and Japan markets?