Date
25 September 2017
Daimler is one of the foreign carmakers that are now manufacturing smaller luxury cars in China. Photo: WSJ
Daimler is one of the foreign carmakers that are now manufacturing smaller luxury cars in China. Photo: WSJ

Luxury carmakers target China with smaller models

Mercedes-Benz has joined the ranks of high-end marques making small luxury cars in China, seeking new avenues for growth as bigger models lose their shine, The Wall Street Journal reported.

For Chinese buyers of luxury cars, big is usually better, but as economic growth slows, growth in the demand for larger luxury vehicles has decelerated.

Last year, the broader market for high-end cars in China grew about 22 percent, down from 43 percent in 2011, consultancy IHS Automotive said. It expects growth to decline to 14 percent this year.

To sustain growth, luxury carmakers are turning to smaller, locally produced vehicles such as the Audi A3, BMW X1 and Land Rover Evoque.

Many who buy smaller luxury cars are first-time buyers, and carmakers are hoping that by luring them early, they can turn them into long-term loyal customers, the report said.

Prices of Audi AG’s A3 Sportback start at about 185,000 yuan (about US$30,000), while the larger A4L lists for about 273,000 yuan.

Local production also fits with China’s policy goal of promoting the country’s car industry.

Daimler AG started production Wednesday on the Mercedes GLA compact sport-utility vehicle at a new plant just outside Beijing dedicated to producing a range of such small luxury vehicles.

Producing the smaller luxury cars in China means Audi, BMW AG and Daimler can avoid import duties of 25 percent, allowing them to sell the cars more cheaply. 

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