Perhaps as early as 2016, China will overtake the United States as the world’s largest market for premium cars. Multinationals currently dominate it in China, but they must now adjust to a market where consumers are becoming more sophisticated than previous generations of buyers, who cared primarily about social status. The reason for the change, in part, is that more premium buyers will be driving their own cars rather than being chauffeured.
Our research compared the preferences of consumers in China and Germany because the latter country’s carmakers hold about 80 percent of the Chinese premium-auto market (exhibit). It suggests that in China, advanced power trains are much more important for attracting high-end buyers than they are in Germany. Fuel efficiency also looms larger for affluent consumers hesitant to step up to premium cars. Perhaps less surprisingly, price matters more in China, particularly for people interested in but less able to afford luxury cars, so there may well be a major market for lower-priced premium models. Germans care more about other attributes: handling and technology for the consumers most willing and able to pay for such cars, quality and comfort for less affluent consumers. Automakers in China shouldn’t stint even on these features, however; our research indicates that many Chinese view some of them as a “given” for premium cars.
Exhibit
The preferences of Chinese consumers who are willing and able to buy luxury cars differ from some of their German counterparts’ priorities.
