China auto dealer Zhongsheng buys 70 pct of German custom specialist
* Zhongsheng Group takes stake in Carlsson Autotechnik
* Plans to create retail chain to sell super-luxury cars
* Mercedes approval means warranties can be maintained
* Companies will set up China plants to make Carlsson kits
BEIJING, May 25 (Reuters) - Zhongsheng Group Holdings Ltd , a major Chinese auto retailer, announced on Friday it has acquired a 70 percent stake in German vehicle-personalization specialist Carlsson Autotechnik GMBH to meet rising demand from wealthy Chinese car owners for custom bodies and souped-up engines.
China's auto retailers like Zhongsheng and Pangda Automobile Trade Co are diversifying their offerings to gain market share as the country's nouveau riche spend millions on luxury cars.
Zhongsheng's chairman, Huang Yi, said the company is formulating "aggressive plans" for Carlsson that will take advantage of Zhongsheng's vast network of dealers stretching from Heilongjiang province in the north to Guangdong in the south.
Huang declined to disclose the financial details of the investment and declined to quantify what kind of revenue and profit growth for Zhongsheng he expects from Carlsson, but said margins on car accessories Zhongsheng sells are already "formidable." Zhongsheng sold 300 million yuan ($47 million) worth of accessories last year through its network, he said.
Huang also said the Carlsson acquisition is aimed at a growing population of owners in Beijing, Shanghai and other mega cities across China where government officials and wealthy buyers have snapped up so many luxury cars that they have lost their cachet.
"The problem is there are so many Mercedes, BMW and Audi cars in Shanghai and Beijing that those cars sometimes feel like mainstream cars, like driving a Camry in Los Angeles," Huang said.
Most of Carlsson's products are authorized by Mercedes-Benz, a status allows Mercedes car buyers to keep warranties for their vehicles from being nullified if they install after-market parts.
Huang said Zhongsheng and Carlsson, which operates out of an historic 19th century manor house, plan to establish a small chain of Mercedes-Carlsson retailers in China to sell super-luxury Carlsson-customized Mercedes cars.
They also plan to establish manufacturing facilities within China to produce Carlsson customization accessories and kits for brands that Zhongsheng represents, Huang said in an interview earlier this week in Beijing.
The Beijing-based auto retail group currently has 140 stores and markets cars for an array of foreign brands that include Lexus, Volvo, Porsche, Toyota and Nissan, in addition to Mercedes.
China's vehicle customizing sector is so new that few companies track sales, making it difficult to assess the market's size, although anecdotal evidence of its promise is easy to see on big-city streets.
Driving through Shanghai and Beijing, Huang said observers can spot a BMW crossover painted matte pink or screaming metallic frog green and a Chery QQ with a Garfield cartoon theme as well as Mercedes and BMWs with tinted windows and customized wheels.
According to Beijing-based market research firm Sinotrust, about 90 percent of 1,237 car owners contacted in a recent survey indicated interest in purchasing accessories, while about 53 percent noted a desire to do so to "express their personal taste."
($1 = 6.3447 Chinese yuan) (Reporting by Beijing newsroom; Editing by Matt Driskill)
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