Luxury Car Brands Expect to Keep Bucking China's Sluggish Trend in 2019

Global luxury-car brands are predicting strong sales growth in China this year after bucking the downward trend last year in an automobile market that saw its first annual sales decline in nearly three decades.

Volkswagen AG’s Audi expects to sell a total of 682,000 vehicles in the world’s largest car market this year, up 2.87% from 2018, according to Jing Qingqing, a vice general manager with the company’s sales department. In 2018, Audi sold 663,000 vehicles in Greater China, up 10.9% year-on-year.

Also, BMW AG predicts its China sales will rise by 10%, extending a 7.7% increase last year when it sold a total of 640,000 units in the country, according to a luxury-car dealer who asked not to be named as he is not allowed to speak to the media.

China’s top-selling premium automotive brand is Mercedes-Benz, whose sales rose by 10.3% to 674,000 vehicles. The fourth-biggest brand by sales — General Motors Co.’s Cadillac — saw sales grow by 31.4% to 228,000 units.

China surpassed the U.S. as the world’s largest auto market in 2009, but the market is increasingly saturated, with car sales dropping 2.8% to 28.1 million units in 2018, the first annual decline in 28 years. The China Association of Automobile Manufacturers predicted the country’s total car sales this year will be roughly the same as in 2018.

Premium models accounted for 12.5% of 2018’s total auto sales, up from 10.8% the previous year, according to statistics from the China Automobile Dealers Association. The uptick comes at the expense of general cars, as many luxury-car makers boosted their sales by adopting strategies such as rolling out lower-price models or directly cutting prices.

Cadillac, for example, has cut the prices of most models by 15%, said Feng Dan, its sales department head in China. Audi rolled out a 19% discount across all models in December, according to a research report from China Merchants Bank.

“A Q3 Audi model with a price tag of less than 200,000 yuan ($29,600) could easily persuade people to move away from a general car,” said an auto company worker who declined to be named.

Also, a tariff policy implemented last year has helped boost sales of premium cars, which make up the majority of China’s car imports. Since July, duties on the bulk of imported autos have been slashed to 15% from as much as 25%.

Contact reporter Mo Yelin (yelinmo@caixin.com)