Chinese luxury automobile sales take a hit as government clamps down on luxury vehicle abuse

Gasgoo.com (Shanghai May 13) - Sales growth in the Chinese luxury automobile market has slowed down to 8.34 percent in the first quarter of the year, the Beijing Times reported today. Several analysts attribute the fall in growth rates to stricter policies limiting the purchase of luxury vehicles for official government use.

The large untapped potential for luxury vehicles in China has attracted a large number of foreign manufacturers to the country. Growth in the luxury car segment reached 80 percent and 40 percent in 2010 and 2011, respectively. By comparison, average growth in the overall Chinese automobile market was only four percent in 2011.

However, slowing sales growth rates in the overall market have finally influenced the luxury car segment. Yayuncun Automobile Market Deputy General Manager Yan Jinghui explains that drawn out price wars between competing brands and various macroeconomic factors have reduced sales and profit growth rates for luxury manufacturers in the country. Furthermore, the Chinese government's decision to severely control purchases of luxury goods by government officials has further affected sales in the segment. "A great deal of luxury vehicle orders coming from the government car field have [vanished]," Mr. Yan pointed out. "Furthermore, policies aimed at restricting vehicle purchases have also had a definite influence." Beginning from March of this year, the number of luxury vehicle purchases from the government sector has decreased significantly.

As a result of declining growth, inventories of nearly all import car dealerships in China were under considerable pressure last year. In response, manufacturers have been limiting the number of vehicles they send to their dealerships in the country. Chinese automobile imports this quarter totaled 229,000 units, 19.4 percent less than a year ago.

According to recent statistics, BMW, Audi and Volvo's Chinese sales for the first four months of the year totaled 118,200 vehicles, 141,500 vehicles and 18,500 vehicles, respectively. Year-on-year sales growth rates for the three manufacturers were around 20 percent, far less than the over 30 percent figures reported in 2012.