Cars
Audi's 2-decade China dominance threatened by BMW, Mercedes
(Agencies)
Updated: 2010-04-22 10:30
 |
Large Medium Small |
Local production
Ingolstadt, Germany-based Audi intends to defend its leading position and has plans to sell 200,000 cars in China in 2010, up from 159,000 last year. BMW delivered 90,500 vehicles in the country in 2009.
With so much at stake, all three carmakers plan to expand local production. BMW is enlarging its existing Chinese factory and building a second one for 560 million euros to more than double capacity to 100,000 vehicles. Daimler, the world's second-largest luxury automaker, currently has capacity to build 100,000 C- and E-Class models at a Chinese plant. "The potential of the Chinese market remains enormous, and our targets are correspondingly ambitious," Daimler Chief Executive Officer Dieter Zetsche said last week.
As the three German rivals slug it out, Volvo Car Corp's plans to grow in China with the help of new owner Zhejiang Geely Holding Co may lead to price slashing for high-end cars in China, a market luxury carmakers count on to boost profit.
"If Volvo chooses China as its second home market, that's probably going to trigger a price war in the premium segment," said John Zeng, an IHS Global Insight analyst in Shanghai, who says cars can sell for 50 percent more in China than in the US.
Premium prices
BMW's 7-Series, with a 1,355,000 yuan ($198,500) base price, costs nearly three times the price of the US version. Audi's A4 in China is 39 percent more expensive than the US starting price, while Mercedes C-Class begins at 348,000 yuan ($51,000), making it 51 percent more expensive than in the US, according to the carmakers' websites.
|
|||||||
Geely agreed to buy Volvo for $1.8 billion from Ford Motor Co on March 28. The Chinese automaker plans to invest $900 million as part of a turnaround of the unprofitable Gothenburg, Sweden-based brand. The expansion includes Volvo's first Chinese factory and a target to sell 200,000 cars in the country within five years. Volvo now has 6 percent of Chinese luxury sales, according to Global Insight.
"We expect competition to pressure prices should the market slow," said John Bonnell, the Bangkok-based director of Asia-Pacific forecasting for J.D. Power & Associates.
