(Repeats story first published on Sunday. No changes to text.)
By Samuel Shen and Norihiko Shirouzu
SHANGHAI/BEIJING, April 20 Global automakers are
scrambling to meet the demands of China's young urban
professionals, who want a car that makes them stand out, yet
don't always have the money to splurge on a top-end model.
After nearly two decades of frenzied growth driven mainly by
the very wealthy, China's auto market is maturing, yet remains
ferociously competitive with manufacturers having to react
quickly to shifting consumer trends.
Today's emerging buyer has more modest financial means, yet
aspires to own a car that's "different".
People like Zhou Wenxi, a 32-year-old Shanghai cram-school
owner, and Guo Yetao, 23, a software salesman from Hangzhou, are
fuelling two trends: hot demand for smaller crossover sport
utility vehicles like Ford Motor Co's EcoSport; and more
interest in affordable, entry-level luxury cars like the Audi
There is a potential "seismic shift" in the influence these
young urban professionals will have on China's auto market, says
Yale Zhang, head of Automotive Foresight, a Shanghai-based
"There are different tiers of young urban professionals.
Some are rich and a bit older, others are more normal," he said.
"But they tend to be similar in two traits: they want to be
different, and don't necessarily have an endless amount of money
to throw around."
Guo, the Hangzhou salesman, recently took out a loan to buy
an EcoSport crossover for 115,800 yuan ($18,700), while Liu Yao,
a 22-year-old office worker in Huaibei in Anhui province,
borrowed from his parents to buy a Haval M4 mini-crossover from
Great Wall Motor Co Ltd for 60,000 yuan.
Among the less well-off young urbanites, the EcoSport, at
94,800 yuan, has been a volume seller for Ford since its launch
early last year. Sales last year were 59,680, and reached 17,392
in January-March of this year.
At this week's Beijing auto show, car makers including PSA
Peugeot Citroen, Hyundai Motor Co
and local firm Haima Automobile Group
will unveil new mini-SUV models. Chevrolet launched
its Trax, a tiny crossover, in China earlier this month.
According to IHS, there were just five subcompact SUV models
on sale in China in 2010. By 2020, there will be almost two
dozen, driving up sales of this segment to more than 880,000
from 345,650 last year.
Other young professionals, maybe small business owners or
higher-earners, are setting their sights higher.
Zhou, the cram-school owner, paid about 280,000 yuan
($45,000) for a red Audi A3 compact sedan. "Audis aren't flashy,
and the A3 is entry-level, so the price isn't outrageous," she
Manufacturers will show off several more affordable,
entry-level luxury cars at the Beijing show.
A crucial shift for them will be to produce more of these
models in China, which would cut the price as they would not be
subject to hefty import duty and other taxes.
Volume sales in this premium compact car sector have trebled
to more than 52,000 in the past four years, according to IHS
data, so remain, for now, a tiny niche in China's total
passenger car market of close to 16.8 million.
Some global luxury brands, such as Nissan Motor Co Ltd's
Infiniti, Honda Motor Co Ltd's Acura and
General Motors Co's Cadillac, have been late to enter
China, and now see its potential as a market for premium cars.
Infiniti is looking to improve price competitiveness with
what global president Johan de Nysschen calls a "very aggressive
...and rapid localisation" strategy - making locally as many as
80 percent of the 100,000 cars Infiniti aims to sell in China in
the medium term. The brand also aims to capture fast-emerging,
young buyers with affordable entry-level luxury cars.
"You've got a big (wave) of people coming in now. They have
disposable income; they are very much attuned to the premium
brands," de Nysschen told Reuters on Saturday. "For us, and for
other car companies, this presents a big opportunity because
it's a market force."
Nissan has no compact car in its product line-up today, but
Infiniti plans to bring the Q30 compact crossover - on display
in Beijing as a concept vehicle - to China eventually after the
model goes on sale in Europe next year.
For now, Infiniti is set to start making a couple of
mid-size cars - the just-launched Q50 sedan and the QX50
crossover - at an existing Nissan plant in Hubei province later
The Q50 currently starts at a hefty 389,800 yuan ($62,900)
in China because it's imported. De Nysschen said the China-made
model should be significantly cheaper once its made locally, and
is not subject to China's import duties and taxes. The Q50
starts at $37,150 in the United States.
Infiniti sold just 17,108 vehicles in China last year,
though that was up 54 percent from 2012. It plans to increase
the number of its China retail outlets to 80 this year from 67
Ford last week said it would open its first eight Lincoln
stores in several cities from October, and would have 60 stores
Five years ago, there were fewer than a dozen luxury car
models sold in China under five premium brands. Today, that has
mushroomed to more than 90 models offered by 25 brands, says
market research firm TNS.
To protect their market edge - and counter slowing economic
growth and a government crackdown on excess - established luxury
brands such as Audi, Mercedes-Benz and BMW
are expanding their line-ups into entry-level models and
producing more models in China to make them more affordable.
Audi, for example, priced its A3 hatchback from 199,000 yuan
last month after it started making the car in Foshan, near
(Additional reporting by Yoko Kubota in TOKYO; Editing by Ian