The Increase in China’s Luxury Auto Segment Expected to Continue image

As China plans to push for economic growth focusing on consumer spending, rather than exports and investment, this could make the luxury auto market see even greater growth.

The US automakers will be the ones to benefit the most, as they are positioned well in the world’s largest auto market and already have plans to increase faster in the profitable premium segment. China auto market has surpassed the US since 2009 and in 2012 it managed to surpass all of Europe combined. Although some analysts feared that the anti-inflationary measures imposed by the government might make luxury sales fall, demand kept increasing throughout 2012.

Luxury sales even surpassed overall auto sales, the segment racking up 36% average annual growth over the past 10 years, compared with 26% for the total auto market in China. A recent study made by McKinsey & Co. shows that China’s luxury sales are expected to grow from 1.25 million last year to 3 million by 2020, surpassing both the US and Western Europe.

Over the years German brands managed to solidify their leadership in luxury sales in the Asian country, now accounting for 80% of the segment. Audi is the luxury leader, followed by BMW and Mercedes-Benz, but the overall sales leader in the country remains GM among all foreign automakers.