City's luxury car market gathering speed
Updated: 2010-11-16 07:31
By Emma An(HK Edition)
The city's appetite for luxury cars has continued to grow despite getting stuck in the mud in other parts of the world since the beginning of the global financial crisis in 2008.
As testament to this, luxury car brands such as Mercedes-Benz and BMW posted stellar sales for the first nine months of 2010. Mercedes-Benz sold a total of 3,335 cars in Hong Kong and Macao - up 51 percent from a year earlier - with the new E-Class series making up over half the sales. Meanwhile, sales of its close competitor, BMW, rose 154 percent to 3,321 compared with the corresponding period last year. The German carmaker's new "5" series has accounted for one-third of its sales total in the city in the first nine months. Although neither firm were able to give specific sales figures and there is debate to what brands make up the luxury car market, China Daily was told by the manager of a prominent local car dealer that the luxury car market accounts for nearly 45 percent of all new cars sold in the city. He also said that he expects this trend to continue, noting that sales of luxury cars barely saw a scratch even during the worst of the financial crisis in 2009.
As was the case for many other businesses, 2009 was one of the toughest years in the history of the auto industry. Global car sales were down 62 percent from 2008, according to a report released by the Society of the Irish Motor Industry (SIMI). In Hong Kong, one source said private car sales were down 21 percent compared with 2008.
However, despite the downturn in market sentiment, luxury car brands such as BMW and Audi recorded increases in their car sales in 2009, albeit at a much slower rate than in previous years. BMW sold 20 more cars in 2009 than in 2008, while Audi increased their sales by 211 .
Although the luxury car market as a whole lost ground in 2009, its market share rose to 41 percent in Hong Kong from 30-35 percent in 2008, according to estimates.
For luxury carmakers, 2010 has been a year to celebrate. BMW expects its full-year sales in the city to reach 4,000. And they expect 2011 figures to be even stronger.
Sales figures have largely been boosted by the economic recovery - and by the numbers of wealthy as well.
The number of high net-wealth individuals (HNWI) - defined as those individuals with investable assets of $1 million or more - in the city has been on an upward trend again after dropping a whopping 61 percent in 2008. According to a report released earlier this year by Merrill Lynch & Co and Capgemini, Hong Kong's HNWI population surged 104 percent to 76,000 in 2009, with an average net worth of $3.9 million.
Chak Wong, a professor of finance at Chinese University of Hong Kong, agreed that the "bounce back" of "wealth" in 2009 probably helped release the pent-up demand for luxury cars after the worst of the global financial storm had passed.
"Cars that should have retired didn't retire," he said, saying that people put off or postponed replacing their cars when the economy was still in the eye of the storm - and people had no idea where it was headed next.
However, he was far less certain that luxury car makers would see their good luck continue in Hong Kong. For one thing, the net wealth of the city's HNWI population has yet to recover to the pre-crisis levels despite the great growth figures seen last year. Wong also noted that the "wealth effect" has been encouraging people to spend. And as much of this wealth has been derived from hot stock and property markets, he said that this would be hard to sustain.
(HK Edition 11/16/2010 page3)