Luxury car brands may get a lift from China
An estimated 12 million cars and light vehicles will be sold in China this year, according to many forecasts that are based on activity during the first three quarters. That means China would replace the U.S. as the world's largest car market, a title the U.S. has held for over a century. The industry's expansion in the most populous nation on earth has helped the fortunes of GM, VW, and Toyota (TM), each of which has significant market share in the country. U.S. carmakers have had particular success in China with light trucks and midsize sedans.
It appears now that faltering luxury car lines may find some relief in China as well.According to a report in The Wall Street Journal, BMW sales in China are up 32 percent for the first nine months of 2009 to 59,460. And Mercedes sales there have risen by 41 percent to 45,400.
Chrysler, which is struggling to survive, doesn't have a luxury car sales operation in China (it sells just Jeep models and small sedans), but larger rivals Ford (F) and GM do. Sales of Cadillacs have been relatively weak in the U.S., but GM is a market-share leader among car companies on the mainland, particularly with Buicks, and it may be able to leverage that position into a beachhead for its luxury nameplate.
Ford's operations in China aren't nearly as large as GM's, but its problems are similar. Sales of its Lincoln brand in the U.S. have been very soft, but if Ford can successfully push the brand in China, it may be able to make up for the modest market its high-end products have in America.
China, not so long ago a relatively poor society, is an unlikely place for a renaissance in luxury cars, but that appears to be changing in the blink of an eye.
Douglas A. McIntyre is an editor at 24/7 Wall St.