Market Trends of Asia Pacific Luxury Cars Industry
This section covers the major market trends shaping the APAC Luxury Cars Market according to our research experts:
High Net Worth Individuals Expected to Be the Prominent Customers for Luxury Car
According to the China Association of Automobile Manufacturers, more than 27 million vehicles were sold in the country in 2018, of which there were around 23.7 million passenger cars. The country also has the second-highest number of High Net Worth Individuals (HNWIs) in the world, concentrated in cities, like Beijing, Shanghai, and Shenzhen.
Most Chinese high net worth individuals appreciate the prestige that their wealth brings them, as well as the associated lifestyle and services. Luxury goods (including cars), brand names, and modern shopping centers are some things that attract their attention. While some first-generation HNW individuals lead a low-profile lifestyle, members of the second generation, who are their children, are often Western-educated and having grown up with wealth, enjoy showing off their affluence through high-end cars and motorcycles.
China’s young millionaires from the technological industry offer the right demographic for luxury cars in the country. China’s luxury Consumer Price Index (CPI), which tracks the prices of luxury goods marketed to the country’s HNWIs, also saw a 4.1% increase from June 2017 to June 2018, compared to the previous year period’s 3.6% rise. Even the per capita disposable income stood around USD 4,165 in 2018, up by 6.5% year-on-year. These factors might lead to growth in the used/ pre-owned luxury car segment in the country over the forecast period.
China is Anticipated to Lead the Luxury Car Market
The Asia-Pacific luxury car market is expected to lead by China, followed by Japan and India. The Chinese luxury car market reflected a steady growth trajectory in 2018 despite weak market sentiment in overall car sales. The overall car sales of the country decreased by around 6% in 2018 compared to 2017.
However, the sales volume of luxury cars reached 2.82 million units, a year-on-year growth rate of 8%. However, this was comparatively slower than the year-on-year growth rate of 17% achieved in 2017, where the sales volume of the market was around 2.61 million units.
In March 2019, the Chinese government cut down VAT on the transportation and manufacturing sectors. Currently, major premium car brands in the country, like Audi, Mercedes-Benz, BMW, Jaguar Land Rover, and Volvo, have already decided to cut suggested retail prices on models sold in China, in response to the government's VAT drop policy for the manufacturing industry.
The Indian government is also taking initiatives to recover the sales of luxury cars in the country by reducing GST, import duties, registration taxes on (luxury) cars, and providing support by banks/NBFCs to offer easy access to loans for dealers and customers, which will help expand the market and boost the overall industry.
