[Correspondent Diary] China’s Luxury Car Market Stretches Its Legs

Last Month, Sales Increased Significantly Centered on Luxury Cars
Compensatory Consumer Sentiment from COVID-19 and Pricing Policies Also Factors
Due to Changing Consumption Patterns, Mid-Range Brands Face Difficulties for the Time Being

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Statistics show that the Chinese automobile market, which had sharply declined in production and sales due to the impact of the novel coronavirus infection (COVID-19), is regaining momentum.

According to the China Association of Automobile Manufacturers, in June, China's automobile production and sales were 2.325 million units and 2.3 million units, respectively. These figures represent increases of 6.3% and 4.8% compared to the previous month. Compared to the same month last year, they rose by 22.5% and 11.6%, respectively.

China accounts for 30% of global automobile sales. Since surpassing the United States in 2009 to become the world's number one market (by sales), it has maintained the top position continuously.

The most notable feature of China's automobile sales last month was the significant increase in luxury car sales. For example, the German Audi A6 sold 17,160 units in June, a 244.6% increase compared to the same month last year. The Mercedes-Benz E-Class sold 15,738 units, up 38.5% year-on-year. The Mercedes-Benz C-Class also saw a 22.7% increase, with 15,230 units sold. The BMW 5 Series, which is due for a model change, sold 14,972 units, a 4.5% decrease compared to the same period last year.

There is an analysis that the COVID-19 pandemic has brought changes to the Chinese automobile market.

First, the compensatory consumer sentiment has increased the demand for luxury cars. It is expected that the consumer sentiment, which had been suppressed due to COVID-19, will lead to increased luxury car sales.

In fact, luxury car sales in China last month increased by 27% compared to the same month last year. Additionally, sales of joint venture brands increased by 7%.

There is also speculation that the generational shift among the main automobile consumer base will further promote luxury car sales. It is highly likely that second-time car buyers in their lifetime will switch to luxury cars.

Luxury car brands lowering prices to attract the Chinese middle class is also influencing sales. The price of cars from well-known brands (entry-level) is around 300,000 yuan (approximately 51 million KRW). This pricing strategy targets the preference of the Chinese middle class, whose income has increased, for luxury brands, thereby boosting luxury car sales.

Experts predict that while China's annual automobile sales will decline for the time being, luxury car sales will continue to increase. Sales of mid- to low-priced models are expected to stagnate or decline, whereas luxury cars will move in the opposite direction.

This automobile consumption pattern in China is expected to make sales of Korean automobile brands even more challenging.

This content was produced with the assistance of AI translation services.